"5.7 Receivable DaysIn 2012, the Cargills PLC receivable days increased 10 days to 14 days. This value suggestsdebtors of firm would not pay the money on time. Further, this would negatively influence on thefirm financial positions and it influences the firm working capital as well. Moreover, if aborrower does not settle the money on time, then it will end with bad debt. On the other hand, thedays of receivable decreased to 8 days in 2014, which means, the debtors would pay on time.Therefore, decrement in the receivable days is beneficial for the firm and it would help toenhance the performance of the firm.In addition, the management of the Cargills PLC couldreduce the receivable days further through the invoice discounting and debt factoring. 6.0 RecommendationsAfter analysis, the author has discovered the Cargills PLC face several issues during the financialyear 2014. The firm net profit margin has decreased drastically which would prevent the firmperformance while firm operating profit margin increased slightly. Hence, the firm mightdecrease the distribution expenses, administrative expenses and other expenses in order toincrease the firm net profit and operating profit margin in future. Likewise, outsourcing andnoncore practices will help the firm to reduce those expenses and using those methods would addsome other benefit to the firm. Furthermore, firm have only smaller amount gearing ratio, whichwould not boost the firm performance. So in future, the firm might think about long-termborrowing from banks or credit unions, which would reduce the firm taxes and it increases thefirm net profit and performance as well. Moreover, firm’s gearing ratio indicates firm operatestheir business in ineffective manner, which cause the firm profit and performance as well. As aresult, the firm management have to make bulk purchase from their suppliers. Bulk purchaseswould decrease the firm cost of sales because bulk purchase offer some discount price to thefirm. Additionally, the management of Cargills should utilise the resources in an effectivemanner. Further company should use proper inventory management techniques to control theirinventory. Moreover, company could think about the bank overdrafts to settle their currentliabilities. In addition, the Cargills PLC should consider the invoice discounting and debtfactoring which will reduce the receivable days of the firm. Further practising that technique willencourage the debtors to pay their payment to firm in quick manner. Page | 9 7.0 ConclusionThe main aim of this report was to identify the different cost categories and understand differentratio method. In this report the author, firstly discuss about the Cargills PLC current and pastbusiness activities and performance. Secondly, this report analysis the different cost types suchas fixed cost, variable cost, marginal cost, direct cost and indirect cost. Moving on, in thefollowing part this report analysed and discussed the Cargills PLC financial performance byutilised different types of ratio and author uses firm balance sheet and income statements toanalysis the ratio. In this section, the author founds out the firm face different challenges in themarketplace. Then in the recommendation part the author provide some recommendation to thefirm to overcome from those issues. Page | 10 ReferencesCargills PLC (2013). Annual report. Retrieved fromhttp://www.cargillsceylon.com/InvestorRelations/downloads/annual_reports/Cargills_Annual_R eport_2013.pdfCargills PLC (2013). Annual report. Retrieved fromhttp://www.cargillsceylon.com/InvestorRelations/downloads/annual_reports/Cargills_Annual_R eport_2011.pdfCargills PLC (2015). Annual report. Retrieved fromhttp://www.cargillsceylon.com/InvestorRelations/downloads/annual_reports/Cargills_Annual_R eport_2014.pdfCargills PLC. (2016a). Our history. Retrieved fromhttp://www.cargillsceylon.com/AboutUs/OurHistory.aspxCargills PLC. (2016b). Company profile. Retrieved fromhttp://www.cargillsceylon.com/AboutUs/CompanyProfile.aspxColombo Stock Exchange [CSE]. (2016). Cargills. Retrieved fromhttp://www.cse.lk/company_profile.docrises. Cambridge, London: MIT Press.Dahlgaard, J., Kristensen, K. & Kanji, G.K. (1992).Quality costs and total quality management.Total Quality Management, 3(3), 211-221Modigliani, F., &Miller, M.H. (1958). The cost of capital, corporation finance and the theory ofinvestment. The American Economic Review, 48(3), 261-297. Ofek, E., & Richardson, M. (2003). DotCom mania: the rise and fall of internet stock prices.Journal of Finance, 58, 1113-1137.Sturzenegger, F., & Zettelmeyer, J. (2007). Debt Defaults and lessons from a decade ofWang, P., & Wen, Y. (2010). Speculative bubbles and financial crises. American EconomicJournal: Macroeconomics, 4(3), 184-221.Page | 11 "