Question

USE THE FOLLOWING FINANCIAL STATEMENTS TO ANSWER QUESTIONS 1, 2 & 3

INCOME STATEMENT	2018	2019
Net Sales	8360	9610
Cost of Goods Sold	5247	6310
Depreciation	1340	1370
EBIT	1773	1930
Interest	620	630
Taxable Income	1153	1300
Taxes	403	455
Net Income	750	845

BALANCE SHEET	2018	2019		2018	2019
Cash	310	405	Accounts Payable	2720	2860
Accounts Receivable	2640	3055	Notes Payable	100	0
Inventory	3275	3850	Current Liabilities	2820	2860
Current Assets	6225	7310	Long-Term Debt	7875	7810
Net Fixed Assets	10,960	10670	Common Stock	5000	5250
			Retained Earnings	1490	2060
Total Assets	17185	17980	Total Liabilities & Equity	17185	17980

1). Calculate the following for 2018 & 2019 and indicate if the change is favorable (+) or unfavorable (-)

a. Current Ratio

b. Inventory Turnover

c. Total Debt to Equity

d. Profit Margin

e. Return on Assets (ROA)

f. Return on Equity (ROE)

2). What is the 2019 dividend payout ratio?

3). Based on 2019 year-end data and a planned "plowback ratio" of 60% ("plowback" is the percentage of net income kept as retained earnings or reinvested in the business), calculate:

a. Internal Growth Rate

b. Sustainable Growth Rate

Answer 1

current ratio	current assets / current liabilities
	2018	2019
total current assets	6225	7310
total current liabilities	2820	2860
current ratio	2.21	2.56
inventory turnover	cost of goods sold / ending inventory
	2018	2019
cost of goods sold	5247	6310
ending inventory	3275	3850
inventory turnover	1.60	1.64
total debt to equity	total liabilities / total equity
	2018	2019
total liabilities	10695	10670
total equity	6490	7310
total debt to equity	1.65	1.46
profit margin	net income / sales *100
	2018	2019
net income	750	845
net sales	8360	9610
profit margin	8.97%	8.79%
return on assets	net income / total assets
	2018	2019
net income	750	845
total assets	17185	17980
return on assets	4.36%	4.70%
return on equity	net income / total equity
	2018	2019
net income	750	845
total equity	6490	7310
return on equity	11.56%	11.56%