You have been employed temporarily by a rich local businessman, Mr Long Pocket, as his assistant. He has been told at the golf club that Sunbright Enterprises pic, a locally based company, would be a good return for his money. The last five years’ results are set out below.

Required: Analyse the last five years’ financial results for the company and calculate the appropriate ratios. Present your advice as a short report.
Note: Horizontal analysis, vertical analysis and a calculation of the cash flow ratio are not required.

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Profit and Loss Accounts Year Ended 31 December 2001 2002 2003 2004 2005 000 000 000 000 000 Sales 1,986 2,001 2,008 2,010 2,012 Cost of Sales (1,192) (1,221) (1,406) (1,306) (1,509) Gross Profit 794 780 602 704 503 Expenses (including loan interest) (633) (648) (487) (606) (437) Profit before Taxation 161 132 115 98 66 Taxation (32) (26) (23) (19) (13) Profit for Year 129 106 79 53