PETDAG PLC's Statements of Comprehensive Income for the years ending 31st December Revenue Cost of Sales Gross Profit Operating expenses Operating profit Finance cost Profit before tax Tax expense Profit for the period PETDAG PLC's Statements of 2019 $000s 2018 $000s 170,000 175,000 (62,050) (59,170) 107,950 115,830 (88,262) (84,150) 19,688 31,680 (7,700) (8,300) 11,988 23,380 (2,388) (4,740) 9,600 18,640 Financial Position as at 31.12.2019 31.12.2018 $000s $000s Intangible assets Non-Current Assets Tangible assets 124,000 130,000 131,320 124,800 Current Assets Inventories 19,390 14,050 Trade receivables 40,290 34,500 Cash and cash equivalents 200 5,150 Total assets 315,200 308,500 Shareholders' equity Ordinary shares @ $1 140,000 140,000 Share premium 30,000 30,000 10% loans Retained earnings Non-Current Liabilities Current Liabilities Trade payables Total shareholders' equities and liabilities 53,850 44,250 77,000 83,000 14,350 11,250 315,200 308,500 + Financial analysis conducted on PETDAG Plc for 2016, 2017 and 2021 (forecasts) revealed the following ratios: 2021 2017 2016 Gross profit margin 64.6% 68.5% 72.6% (GPM) Net profit margin 13.2% 16.7% 25.4% (NPM) Acid-test ratio 2.4:1 3.60:1 3.72:1 Inventory turnover Receivables 4 times 5.22 = 6 times 5.67 6 times 90 days 68 days collection period Gearing ratio 48% 30.5% 65 days 32.5% Additional information: 1. PETDAG's operating expenses include research and development expenses, advertising and promotion expenses, and selling, general and administrative expenses. 2. Selling, general and admnistrative expenses for 2019 and 2020 (forecasts) include donations and costs incurred to conduct community projects amounting to $2,400,000 and $3,500,000, respectively. Required: Prepare a report for the directors of PETDAG Plc, that explains: (a) the company's financial performance and financial position for 2018 and 2019. (Gross profit margin; Net profit margin; Acid test ratio; Inventory turnover; Receivable collection period; gearing ratio) (25 marks)