Question 11 Reece Joy, the credit controller of Blyth Ltd, is deciding whether to offer a customer - Southend Ltd - payment terms of up to 60 days. She has obtained the most recent financial statements of Southend Ltd, which are set out below, and has asked for your assistance in analysing the company. SOUTHEND LTD STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2021 REQUIRED a) Calculate the following ratios (to 1 decimal place) which will enable you to assess Southend Ltd's profitability, liquidity, use of resources and risk. - Trade payables payment period ( X days) - Inventory holding period ( X days) - Trade receivables collection period ( X days) - Operating profit percentage ( X%) - Current ratio (X:1) - Gearing (X\%) b) Prepare a memorandum for Reece analysing the ratios you have calculated, as compared to the industry averages, which are given below. INDUSTRY AVERAGE RATIOS - Trade payables payment period (57.2 days) - Inventory holding period (36.1 days) - Trade receivables collection period (48.9 days) - Operating profit percentage (20.0%) - Current ratio (2.1:1) - Gearing (36.4\%) (12 marks) c) Advise Reece as to whether she should offer payment terms of up to 60 days to Southend Ltd. (1 mark) [TOTAL MARKS = 25]