Trixies Ltd, based in Manchester, manufactures and sells crash test and shop display mannequins across Northern Europe. After a period of rapid growth between 1995 and 2010, the company has recently been experiencing falling sales, as clients have increasingly switched orders to cheaper manufacturing plants in Eastern Europe. Trixies factory in Manchester was constructed in 1995, funded partly from retained profits and partly by a bank loan secured on the facility on a 25 year fixed rate deal. Most equipment is leased on long terms for the useful life of the asset. The company does not yet employ an asset replacement schedule, preferring to source new equipment when existing equipment fails or becomes uneconomical to run. Their most recent market research indicates that the European market for their products is unlikely to return and the Directors have decided that they wish to construct a new satellite distribution facility in China to facilitate sales into the Far East.

Paper delivered at LTU and Partners in April 2022 Page 4 of 6 Question 3: Trixies Ltd Trixies Ltd, based in Manchester, manufactures and sells crash test and shop display mannequins across Northern Europe. After a period of rapid growth between 1995 and 2010, the company has recently been experiencing falling sales, as clients have increasingly switched orders to cheaper manufacturing plants in Eastern Europe. Trixies factory in Manchester was constructed in 1995, funded partly from retained profits and partly by a bank loan secured on the facility on a 25 year fixed rate deal. Most equipment is leased on long terms for the useful life of the asset. The company does not yet employ an asset replacement schedule, preferring to source new equipment when existing equipment fails or becomes uneconomical to run. Their most recent market research indicates that the European market for their products is unlikely to return and the Directors have decided that they wish to construct a new satellite distribution facility in China to facilitate sales into the Far East. Extracted data from the 2019 Annual Financial Statements. Income Statement 2019 2018 Sales Turnover 720,000 1,190,000 Cost of Sales 205,000 330,000 Labour Costs 190,000 320,000 Administrative and Office Costs 100,000 170,000 Power/Heat/Light 75,000 60,000 Distribution and Delivery 90,000 55,000 SOFP as at 31st December 2019 Non-Current Assets Freehold Premises 4,000,000 Plant and Machinery 500,000 Motor Vehicles 150 ,000 4,650,000 Current Assets Stock 500,000 Trade Receivables (Debtors) 460,000 Cash 5,000 965,000 Less Current Liabilities Trade Payable (Creditors) 120,000 Less Non-Current Liabilities Secured Loan 3,000,000 Leasehold Financing 1,000,000 Net Assets 1,495,000 Capital B/Fwd. 1,435,000 Add Profit 2019 60,000 1,495,00