FOTRSU/Game Mechanic question - what determines ship sinking

[Zero Niner]

I'm curious what determines whether a ship sinks or continues sailing once hit by a torpedo. I'm assuming there is some sort of hit point system where a torpedo or deck gun hit does x amount of damage, this amount perhaps randomised within a band.
What other factors are in play? Where the target is hit? Some random factor that simulates the cargo being carried?