The following financial statements are extracts from the accounts of Hoult Ltd:

Annual depreciation was £18,000 in year 1, £13,000 in year 2 and £11,000 in year 3. The 

per cent bonds are redeemable in instalments: the final payment is due in year 4.

The finance director is concerned about rising short-term interest rates and the poor liquidity of Hoult Ltd. After calculating appropriate ratios, prepare a report that comments on the recent performance and financial health of Hoult Ltd.

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Statements of profit or loss for years ending 31 December Year 1 Year 2 Year 3 000 000 000 Revenue 960 1,080 1,220 Cost of sales 670 780 885 Gross profit 290 300 335 Administration expenses 260 270 302 Profit before Interest and tax 30 30 33 Interest 13 14 18 Profit before tax 17 16 15 Taxation 1 Profit after tax 15 15 14 Dividends Retained profit 15 15 10