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QUESTION 3. The statements of financial position as at 31 March 2019 and 2020 and the income statement for the year ended 31 March 2020 for Methusa plc are as follows: Statements of financial position as at 31 March 2019 and 2020 2019 m 2020 m ASSETS Non-current assets Property, plant and equipment Land and buildings Machinery and equipment 350 175 525 350 231 581 Current assets Inventories Trade receivables 125 265 132 249 381 906 390 971 Total assets EQUITY AND LIBILITIES Equity Called-up ordinary share capital Share premium account Retained earnings 68 120 36 172 328 76 144 520 411 Non-current liabilities Bank borrowings Current liabilities Short-term borrowings (bank overdraft) Trade payables Taxation 102 126 14 242 906 93 121 18 232 971 Total equity and liabilities Income statement for the year ended 31 March 2020 m Revenue Cost of sales Gross profit Distribution expenses Administrative expenses m 924 (383) 541 (164) (212) 165 48 213 22 235 (27) 208 (36) 172 Other operating income Operating profit Interest receivable Interest payable Profit before taxation Taxation Profit for the year Required A Calculate the operating cash cycle for Methusa plc. (see the formula sheet) [15 marks] B. Identify how the OCC can be improved. [6 marks] C. What are the associated costs and risks that must be considered in the bid to improve OCC? [4 marks] Total 25 marks END OF PAPER. QUESTION 3. The statements of financial position as at 31 March 2019 and 2020 and the income statement for the year ended 31 March 2020 for Methusa plc are as follows: Statements of financial position as at 31 March 2019 and 2020 2019 m 2020 m ASSETS Non-current assets Property, plant and equipment Land and buildings Machinery and equipment 350 175 525 350 231 581 Current assets Inventories Trade receivables 125 265 132 249 381 906 390 971 Total assets EQUITY AND LIBILITIES Equity Called-up ordinary share capital Share premium account Retained earnings 68 120 36 172 328 76 144 520 411 Non-current liabilities Bank borrowings Current liabilities Short-term borrowings (bank overdraft) Trade payables Taxation 102 126 14 242 906 93 121 18 232 971 Total equity and liabilities Income statement for the year ended 31 March 2020 m Revenue Cost of sales Gross profit Distribution expenses Administrative expenses m 924 (383) 541 (164) (212) 165 48 213 22 235 (27) 208 (36) 172 Other operating income Operating profit Interest receivable Interest payable Profit before taxation Taxation Profit for the year Required A Calculate the operating cash cycle for Methusa plc. (see the formula sheet) [15 marks] B. Identify how the OCC can be improved. [6 marks] C. What are the associated costs and risks that must be considered in the bid to improve OCC? [4 marks] Total 25 marks END OF PAPER
