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Beet Route plc is a long-established company in the fruit-packing trade. You know that the company has many valuable assets and a lot of other businesses would be keen to buy it and exploit the land, buildings, and licences which it owns. You know that in 20X0, the existing board of directors was replaced and new directors were appointed. The new directors now own 40% of the shares between them.

You have also identified that no major purchases of new machinery have been made since 20X1, and several valuable non-current assets have been sold since then.

The following information is made available to you. It details the man performance ratios for this company, and the industry averages. The company draws up its accounts to 31 December each year.

Required

It is 31 March 20X5. Suggest reasons for the major changes in the performance of this company since 20X0. You may consider the payables days and receivables days ratios together.

What do you think the directors of this company are doing, and what may be the long-term impact of their actions? Do not exceed 1,000 words.

Performance ratio	20X0	20X1	20X2	20X3	20X4	Industry Average (20X4)
Gross profit margin	36%	35%	35%	35%	35%	34%
Return on capital employed	13%	13%	14.5%	14%	14%	13%
Receivables days	35	37	38	42	46	33
Payables days	26	29	43	44	55	31
Dividend per share	13.3p	14.6p	16.6p	19p	30p	Not available
Price-earnings ratio	7	6.8	6.6	5	3.5	Not available
Dividend cover	2.2	2	1.2	1.0	0.9	2.5
Interest cover	3	2.4	2	1.7	1.7	2.3

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