2013 2014 sales 2100 Cost of Goods Sold 1200 Depreciation Expense 225 Interest Expense 175 Current...

	2013	2014
sales		2100
Cost of Goods Sold		1200
Depreciation Expense		225
Interest Expense		175
Current Assets	1000	1300
Total Fixed Assets	3500	4000
Accumulated Depreciation	1250	This can be determined from the information given
Current Liabilities	900	975
Long-term Debt	1500	1350
Common Stock	400	This can be determined from the information given

Question 1 part one) Use the information above to construct a 2014 income statement and balance sheets for both years. The average tax rate is 35% and the dividend payout ratio is 65%. Then, find OCF, NCS, Change in NWC, FCF, CFC, and CFS.

Question 1 part 2) Construct the common-size income statement and balance sheet for 2014.

Calculate the following ratios: current ratio, total asset turnover, total debt ratio, equity multiplier, profit margin, return on assets, return on equity.

Deconstruct return on equity according to the DuPont identity. Explain what this deconstruction tells us.

Calculate internal growth rate and sustainable growth rate.

Expert Solution

As per rules I am answering the first 4 sub parts of this question

1)

Income statement for 2014
Sales		2100
Less: Cost of goods sold	1200
Depreciation	225
PBIT		675
Less: Interest	175
PBT		500
Less: Taxes= PBT*35%	175
Profit after tax		325
Less: Dividend	211.25
Income transferred to retained earnings		113.75

2)

Balance Sheet as on XXX2013
Liabilities and equity		Assets
Current liabilities	900	Current Assets		1000
Long term debt	1500	Fixed assets	3500
Common stock	400	Less: Accumulated depreciation	1250
Retained earnings= balancing figure	450	Net fixed assets		2250

Total liabilities and equity	3250	Total Assets		3250

3)

Balance Sheet as on XXX2014
Liabilities and equity		Assets
Current liabilities	975	Current Assets		1300
Long term debt	1350	Fixed assets	4000
Common stock	936.25	Less: Accumulated depreciation (1250+225)	1475
Retained earnings (450+113.75)	563.75	Net fixed assets		2525

Total liabilities and equity	3825	Total Assets		3825

4. Operating cash flow= EBIT + depreciation - tax

= 675+225-175

=$ 725

jeff jeffy answered 2 years ago

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