Look at the table below, which compares data from two furniture manufacturers, and then answer the questions that follow. Financial efficiency and gearing ratios Company X Company Y Value of stocks 31/12/10 ($m) 73 150 28 marks, 50 minutes 1 Calculate for both companies: a debtors days ratios b stock turnover ratio c gearing ratio. Show all workings. Cost of sales 2010 ($m) 580 750 [12] 2 Company Y is planning to invest in a new expansion project costing $75 million. a Would you advise the business to raise all of this finance by selling off stock and reducing its inventory levels? Explain your answer. [4] Sales revenue ($m) 1120 1460 Capital employed ($m) 1575 2050 Long-term loans ($m) 500 1025 b Would you recommend Company Y to finance this expansion with a bank loan? Explain your answer. 3 Recalculate the new gearing ratio. (Hint: you must increase both long-term loans and capital employed by the amount of the increased loan.) [8] [4]