1 Bragg Plc wants to acquire a majority holding in a private limited company. The Managing Director of Bragg plc has asked you to analyse the financial statements of two possible companies and to deal with some queries he has about financial statements. He has stated you to consider the profitability of the companies and their financial position. The financial statements of the two companies are below: Income and Statement For the year ended March 31, 2020 Roy Ltd. $000 Ishiguro Ltd. $000 8,483 10,471 Revenue Cost of sales Gross profit Distribution costs (3,732) (5,026) 4,751 5,445 (1,218) (1,483) Administrative costs (903) (1,658) ahgex Operating profit 2,630 2,304 Interest paid and similar charges (160) (520) Profit on ordinary activities before taxation 2,470 1,784 Tax on profit on ordinary activities (593) (428) Profit for financial year 1,877 1,356 Dividends (400) Retained profit for the financial year Net Income (800) 1.477 556 Balance Sheet Statement of Financial Position As at March 31, 2020 Roy Ltd. $000 Ishiguro Ltd. $000 6,806 12,579 Non-current Assets Current assets Stock 2,531 2,181 Debtors Recutes, 1,054 2,309 Cash at bank and in hand CA 828 5 Total assets 11,219 17,074 Equity and liabilities Capital and reserves Ordinary share capital of $1 each 2,000 2,000 Profit and loss Non-current liabilities Loan L 4,367 4,997 2,000 6,500' Current liabilities Trade creditors e That Dividend payable Paujabis Dear 3852 859 1,366 9577 Bank overdraft 400 800 483 Taxation 593 428 Net Income 11,219 17,074 Required: Prepare a report for Bragg ple that includes the following: A. Calculation of the following ratios of Roy Ltd and Ishiguroe Ltd: Return on equity Gross profit percentage Gearing Interest cover (10 marks)