Trixie's 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. Trixie's 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 Sales Turnover Cost of Sales Labour Costs Administrative and Office Costs Power/Heat/Light Distribution and Delivery Non-Current Assets Freehold Premises Plant and Machinery Motor Vehicles Current Assets Stock Trade Receivables (Debtors) Cash Less Current Liabilities Trade Payable (Creditors) Less Non-Current Liabilities Secured Loan Leasehold Financing Net Assets Capital B/Fwd. Add Profit 2019 SOFP as at 31st December 2019 500,000 460,000 5,000 965,000 120,000 3,000,000 1,000,000 2019 1,435,000 60,000 720,000 205,000 190,000 100,000 75,000 90,000 4,000,000 500,000 150,000 4,650,000 1,495,000 1,495,000 2018 1,190,000 330,000 320,000 170,000 60,000 55,000 Additional Notes: Questions The Company has debtors of 460,000, some of which date back several years. Average 'debtor days' are 150 (60 last financial year), average 'creditor days' are unchanged since last year at 28. 1. Analyse and assess the effectiveness of Working Capital Management and suggest ways in which this may be improved in future 2. The company has been experiencing cash flow problems and a lengthening of the Operating Cash Cycle, what sources of short term finance should Trixie's consider and what are the advantages and disadvantages of each? 3. Produce a report for shareholders on the financial health and viability of the company; focusing on the value, profitability, sustainability and performance of the business in 2019.