2/ each financial question needs to be solved completely and also writes the how to reach the answer with it

QUESTION A2 Brighton plc is considering purchasing an interest in its competitor Hove plc. The Managing Director of Brighton plc has obtained the two most recent statements of profit or loss and statements of financial position for Hove plc as shown below: Statement of Profit or Loss for Hove plc for the years ending 31/12/2020 31/12/2019 Revenue 1,600,047 (963,351) Cost of sales 1,705,047 (1,086,701) 618,346 636,696 Gross profit Other operating income Distribution costs 39,045 40,045 Administrative expenses (33,891) (156,256) 485,594 (32,987) (146,566) 478,838 Profit 7 (loss) from operations Investment income 11,000 Finance costs (6,260) 11,000 (6,590) 483,248 Profit/(loss) before tax 490,334 (22,500) Income tax expense Profit/(loss) for year (22,500) 460,748 467,834 31/12/2020 31/12/2019 365,200 Non-current assets Land and buildings Property, plant and equipment Intangible assets 60,200 362,300 55,800 12,000 430,100 12,500 437,900 Current assets Inventories Trade receivables Prepayments Cash and cash equivalents 65,000 161,079 15,000 112,270 353,349 62,500 145,678 17,000 84,106 309,284 783,449 747,184 Total assets Current liabilities Trade payables Tax payable Provision Preference dividend 12,000 22,500 5,000 2.500 42,000 13,500 22,500 6,000 2,500 44,500 Non-current liabilities Borrowings 62,600 62,600 104 600 107.100 Total liabilities Net assets 678,849 640,084 Equity and Liabilities Ordinary share capital Preference shares Retained earnings 110,000 50,000 518,849 110,000 50,000 480,084 Total equity 678,849 640,0B4 Focus ingdom Required: a) Explain the purpose of ratio analysis, what type of information it reveals and the limitations of its use. b) Calculate 1) Gross profit margin 2) Operating profit margin 3) Return on capital employed 4) Inventory holding period 5) Settlement period for trade receivables 6) Settlement period for trade payables 7) Current Ratio 8) Acid Test Ratio 9) Interest cover 10) Gearing Ratio You should include the formula for the ratio itself and a calculation for both years using the data above Using the information provided by these ratios, comment on the financial performance of Hove plc advising whether Brighton plc should invest in Hove ple or not? Present Value Tables Present value of 1. ie. (1+0) where r = discount rate n=number of periods untill payment Discount rates (0) 5% 6% 3% 7% Periods (n) 1% 10.990 2 0.980 0.971 0.961 5 0.951 6 0.942 7 0.933 0.923 9 0.914 10 0.905 11 0.896 12 0.887 13 0.879 14 0.870 15 0.861 COU AUNE 2% 0.980 0.961 0.942 0.924 0.906 0.888 0.871 0.853 0.837 0.820 0.804 0.788 0.773 0.758 0.743 0.971 0.943 0.915 0.888 0.863 0.837 0.813 0.789 0.766 0.744 0.722 0.701 0.681 0.661 0.642 4% 0.962 0.925 0.889 0.855 0.822 0.790 0.760 0.731 0.703 0.676 0.650 0.625 0.601 0.577 0.555 0.952 0.907 0.864 0.823 0.784 0.746 0.711 0.677 0.845 0.614 0.585 0.557 0.530 0.505 0.481 0.943 0.890 0.840 0.792 0.747 0.705 0.665 0.627 0.592 0.558 0.527 0.497 0.469 0.442 0.417 0.935 0.873 0.816 0.763 0.713 0.666 0.623 0.582 0.544 0.508 0.475 0.444 0.415 0.388 0.362 8% 9% 2.926 0.917 0.857 0.842 5.794 0.772 2.735 0.708 9.681 0.650 0.630 0.596 0.583 0.547 2.540 0.502 0.500 0.460 2.463 0.422 0.429 0.388 0.397 0.356 2.368 0.326 9.340 0.299 1.315 0.275 10% 0.909 0.826 0.751 0.683 0.621 0.564 0.513 0.467 0.424 0.386 0.350 0.319 0.290 0.263 0.239 11% 12% 13% 14% 15% 16% 17% 20% 5 6 7 8 9 10 11 12 13 14 15 0.901 0.812 0.731 0.659 0.593 0.535 0.482 0.434 0.391 0.352 0.317 0.286 0.258 0.232 0 209 0.893 0.797 0.712 0.636 0.567 0.507 0.452 0.404 0.361 0.322 0.287 0.257 0.229 0.205 0.183 0.885 0.783 0.693 0.613 0.543 0.480 0.425 0.376 0.333 0.295 0.261 0.231 0.204 0.181 0.160 0.877 0.769 0.675 0.592 0.519 0.456 0.400 0.351 0.308 0.270 0237 0.208 0.182 0.150 0.140 0.870 0.756 0.658 0.572 0.497 0.432 0.376 0.327 0.284 0.247 0.215 0.187 0.163 0.141 0.123 0.862 0.743 0.641 0.552 0.476 0.410 0.354 0.305 0.263 0.227 0.195 0.168 0.145 0.125 0.108 0.855 0.731 0.624 0.534 0.456 0.390 0.333 0.285 0.243 0.208 0.178 0.152 0.130 0.111 0.095 18% 19% 0.847 0.840 0.718 0.706 0.609 0.593 0.516 0.499 0.437 0.419 0.370 0.352 0.314 0.296 0.266 0.249 0.225 0.209 0.191 0.176 0.162 0.148 0.137 0.124 0.116 0.104 0.099 0.088 0.084 0.074 0.833 0.694 0.579 0.482 0.402 0.335 0.279 0.233 0.194 0.162 0.135 0.112 0.093 0.078 0.065