根据上述对财务比率的评估，提出了一些建议。下面讨论了这些问题。如果没有保持最佳现金流，无论业务的盈利能力如何，都将受到影响。公司需要降低库存水平，并应与所实现的销售增长保持一致。库存水平的降低将降低采购原材料的成本以及处理库存的成本。存货周转率计算如下(Harris & Mongiello, 2012)。本年度库存为89万英镑，库存周转率为58天。基于此，估计货物成本约为560万英镑。如果库存水平符合行业标准，那么销售成本将达到365万英镑。这一削减足以偿还贷款。生产部门需要了解必须保持的库存水平，以便减少库存周转率。
Working capital can be estimated mathematically as the difference between the current assets and current liabilities. The impact of the reduction in the working capital will have considerable impact on the funds available for operations. The working capital in the current year is impact as there will be reduction in the cash flow as a result of reduction in cash flow due to above factors. This is to say that non-availability of cash as a result of high inventory and low level of realization results in reduction in the current assets. Further the increased liability may be there to meet the business requirements that would otherwise have been fulfilled by the cash flow from operations.The above discussion clearly shows that the efficiency in handling the capital or the resources will impact the liquidity of the company. However all the aspects discussed above are quite critical and have significant impact on the performance of the company. The cash flow statement has three components and all three are dependent on each other. In the present cash the cash inflow from operations is not able to meet the outflow requirements of financing of repayment of £250,000.
Some recommendations have been made based on the above assessment of the financial ratios. These have been discussed below.In case the optimum cash flow is not maintained the business that will be impacted irrespective on the profitability of the business. The company need to reduce the inventory levels and should be in line with the sales growth that is achieved. Reduction in the inventory levels will reduce the cost incurred in purchase of raw material as well as the cost of handling inventory. The inventory turnover is calculated as shown below (Harris & Mongiello, 2012).In the current year the inventory level is £890,000 while the inventory turnover is 58 days. Based on this it can be estimated that the cost of goods is around £5,600,000. In case the inventory levels would have been as per the industry standards the cost of goods sold would have been £3,650,000. This reduction would have been sufficient to meet the loan repayment. The production department need to be aware about the inventory levels that have to be maintained so that inventory turnover could be reduced.