The summarised annual financial statements for Eskdale Plc are given below for the year to 31 December 2017, and three years later for the year to 31 December 2020. The financial statements show that Return on Capital Employed stood at 10.8% in 2017 and 5.6% in 2020. By analysing the drivers of earnings based on the financial statement data provided, you should explain why profitability has declined and the key drivers which have caused this. The average tax rate for both years on financing activities is 27%.

Eskdale Plc
	(000)	(000)
STATEMENT OF FINANCIAL POSITION	2020	2017
Assets
Cash and Short Term Investments	8,232	9,500
Receivables	34,972	21,225
Total Inventories	16,762	16,316
Other Current Assets	550	871
Current Assets Total	60,516	47,912
Property Plant and Equipment Gross	82670	67,420
Accumulated Depreciation	51,158	37,300
Property Plant and Equipment Net	31,512	30,120
Intangible Assets	8,612	7,516
Total Assets	100,640	85,548
Liabilities & Shareholders' Equity
Accounts Payable	19,431	14,072
Short-Term Debt and Current Portion of Long-Term Debt	900	1,050
Accrued Payroll	1,573	2,689
Income Taxes Payable	105	419
Other Current Liabilities	2,631	1,767
Current Liabilities Total	24,640	19,997
Long Term Debt	14,700	10,015
Provisions and Other Liabilities	21,001	17,546
Shareholders Equity	40,299	37,990
Total Liabilities & Shareholders' Equity	100,640	85,548
STATEMENT OF PROFIT AND LOSS
Net Sales	95,006	86,416
Less: Cost of Goods Sold	66,112	62,954
Less: Depreciation and Amortization	9,412	5,520
Gross Income	19,482	17,942
Less: Selling, General & Administrative Expenses	15,181	11,661
Operating Income	4,301	6,281
Add: Interest Income	219	172
Earnings before Interest and Taxation (EBIT)	4,520	6,453
Less: Interest Expense	1,030	567
Pretax Income	3,490	5,886
Less: Income Taxes	1,222	1,767
Net Income	2,268	4,119
	2016	2013
Return on Capital Employed	5.6%	10.8%