The following financial statements are extracts from the accounts of Hoult Ltd:
Statements of profit or loss for years ending 31 December

Financial position statements for years to 31 December

Annual depreciation was ‚¬18,000 in year 1, ‚¬13,000 in year 2 and ‚¬11,000 in year 3. The 8 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.

Transcribed Image Text:

Year 1 Year 2 Year 3 Revenue Cost of sales Gross profit Administration expenses Profit before interest and tax Interest Profit before tax Taxation Profit after tax Dividends Retained profit 960 670 290 260 30 13 17 2 15 0 15 1,080 780 300 270 30 14 16 1,220 885 335 302 18 15 15 0 15 14 4 10 Year 1 Year 2 Year 3 E000 000 Non-current assets Current assets 160 120 100 Inventory Trade receivables 210 180 390 250 360 520 475 575 160 5 9 Total assets Equity Ordinary shares Profit and loss Non-current liabilities 160 95 160 110 255 270 280 8% bonds 120 80 40 Current liabilities Trade payables Overdraft 145 110 75 9 255 575 520 510