Phoenix has carried on business for a number of years as a retailer of a wide variety of consumer products and it operates from a number of stores. In recent years the entity has found it necessary to provide credit facilities to its customers in order to maintain growth in revenue. As a result of this decision the liability to its bankers has increased substantially. Extracts from the financial statements for the year are provided below. INCOME STATEMENTS FOR THE YEARS ENDED 30 JUNE Revenue Cost of sales Gross profit Other operating costs Profit before interest Interest from credit sales Interest payable Profit before taxation Income tax expense Profit for the year 20X7 20X8 20X9 Sm Sm Sm 1,850 (1.250) 2,200 (1.500) 2,500 (1,750) 600 700 750 (550) (640) (700) 50 60 50 45 60 90 (25) (60) (110) 70 60 30 (20) (10) 47 40 20 STATEMENTS OF FINANCIAL POSITION AT 30 JUNE 20X7 20X8 20X9 Sm $m $m Property, plant and equipment 278 290 322 Inventories 400 540 620 Trade receivables 492 550 633 Cash 12 12 15 Total assets 1,182 1,392 1,590 Share capital Reserves Bank loans 90 90 90 90 292 282 372 3821 372 320 520 610 Other interest bearing borrowings Trade payables Tax payable Total equity and liabilities Other information Depreciation charged for the three years in question was as follows. Year ended 30 June 200 200 320 270 270 280 20 20 8 1.182 1,392 1,590 20X7 20X8 20X9 Sm $m $m 55 60 70 Required: Using suitable ratios, analyse the information provided and recommend what actions should be taken.