Accounting decisions The Appendix contains a summary of TTC's accounts for the year to 31 May 2017. The Finance Director wants to improve liquidity, reduce gearing and increase recorded profitability over the next financial year. He has already decided to delay payments to all suppliers by an additional month. He has to decide whether to make the changes shown in Table 3 during the next financial year. Table 3: Finance Director's decisions Proposed change: Planned initial impact on accounts: 1. Reduce the dividend payment from $12m to $6m. Increase cash and retained earnings 2. Sell and leaseback the premises of 10 TTC travel agencies (non-current assets) for $15m to a property company that is keen to buy them. The cash received could pay off some long term loans. Reduce gearing ratio Appendix: Summary of TTC accounting data Income statement summary (year ending 31 May 2017) Statement of financial position summary (as at 31 May 2017) Revenue $346m Non-current assets $138m Gross profit $58m Current assets including: Inventories $17m $2m Non current liabilities $75m Profit for year $23m Capital employed $135m Dividends $12m Total shares issued 12m Retained earnings $11m Current market share price $10 (a) Refer to the Appendix. Calculate: (i) gearing ratio (ii) dividend yield. (b) Discuss the likely impact on TTC's shareholders if the two changes referred to in Table 3 are made during the next financial year.