Question

Income statement (millions of dollars)

Net sales	$ 39,579
COGS	$ 12,180
Other Expenses	$ 12,147
Depreciation	$   7,554
EBIT	$   7,698
Interest Expense	$   2,055
Income Before Tax	$   5,643
Tax Expense (35%)	$   2,055
Net income	$   3,669
Dividends	$   2,568

Balance sheet (millions of dollars)

Cash	$       300
Accounts Receivable	$ 10,000
Inventories	$   5,000
Other Assets	$    3,000
Property, Plant and Equipment, net	$100,000
Other Long-Term Assets	$ 15,000
Accounts Payable	$   8,000
Short-Term Debt	$   5,000
Other Current Liabilities	$   3,000
Long-Term Debt & Leases	$ 25,000
Other Long-Term Liabilities	$ 17,000
Shareholder’s Equity	$ 30,000

g.) Calculate Return on Equity

h.) Calculate Return on Assets

i.)Calculate Net Profit Margin

j.) A firm reported Net Income of $20,200,000 in 2016. The balance of the Retained Earnings Account at the beginning of 2017 was $14,500,000 in 2017 and at the beginning of 2016 the balance of the Retained Earnings account was $11,500,000. What was the total amount of dividends the firm paid in 2016?

Answer 1

ans g.	Return on Equity (ROE) = Net Income/Shareholders' Equity
	ROE	[$3669/$30000]	12.23%
ans h.	Return On Assets (ROA)= Net Income/Total Assets
	ROA	[$3669/$133300]		2.75%
	Particulars			Amount
	Cash			$300
	Accounts Receivable			$10,000
	Inventories			$5,000
	Other Assets			$3,000
	Property, Plant and Equipment, net			$100,000
	Other Long-Term Assets			$15,000
	Total Assets			$133,300
ans i.	Net Profit = Net Income/Sales
	Net Profit	[$3669/$39579]		9.27%
ans j.	Ending Retained Earnings = Beginning Retained Earnings + Net Income - Dividend
	Dividend = Beginning Retained Earnings + Net Income - Ending Retained Earnings
	Dividend	[$11500000+$20200000-$14500000]
	Dividend	$17,200,000