The accountant of Maypole plc has just completed the financial reports for the year ended 31^st December 2017. The Financial Director has asked for a report to be prepared to enable the Board of Directors to get a clear picture of the performance and financial position of the company. The company produces only one product and it is sold worldwide.

(a) Discuss the performance over the period from 2015 to 2017 and the financial position at the end of each year. In your answer, focus on the possible causes of the differences over the three year period.

(b) Suggest ways by which the Return on Capital Employed (ROCE) could be improved.

	2015	2016	2017
Sales units	800	900	1000
	0	0	0
Sales revenue	84	86.4	98
Cost of sales	21	28	32
Gross profit	63	58.4	66
Administration expenses	16	18.9	22
Advertising and promotion expenses	20.6	27.8	30
	36.6	46.7	52
Profit before interest and tax	26.4	11.7	14
Interest expense	1	5	9
Profit / (Loss) before tax	25.4	6.7	5
Tax payable	6.4	1.7	1.2
Profit for the year	19	5	3.8
Ratios (using the ratios in the course notes)
Gross profit percentage	75.00%	67.60%	67.30%
Net profit percentage	31.40%	13.50%	14.30%
Return on Capital Employed	19.30%	6.60%	6.80%
Return on Shareholders Funds	15.00%	3.80%	2.80%
Inventory days	139	156	194
Receivables days	52	68	82
Gearing	7.30%	24.40%	34.50%
Times Interest Earned	26.4	2.3	1.5