161417 Ritz Company is into diversified business selling various products including consumer durables. Financial statements for the company are given below Balance Sheet as of December 31* 2018 and 2019 Common stock Additional paid up capital Treasury stock (shares bought back) at cost Retained earnings Total equity Total liabilities and shareholders' equity 322834 53641 -110948 2021265 2320620 4826512 57072 -102705 2024474 2182869 4365844 Rs. in thousands Income statement for the year ended 31st December 2018 and 2019 Rs. in thousands Assets Cash Accounts receivable Inventories Prepaid expenses total current assets Investments Fixed assets at cost Less accumulated depreciation Net fixed assets Goodwill Other assets Total assets Liabilities and equity Accounts payable Short term debts Accrued expenses payable Total current liabilities Long term liabilities Total liabilities convertible stock 31st December 2018 23952 687325 1157798 77167 1946242 1058637 1366719 -645734 720985 577606 62374 4365844 31st December 2019 28912 756152 1244912 76140 2106116 1116534 1566268 -723442 842826 645210 115826 4826512 Sales revenue (net) Cost of goods sold Excise duty/ GST Gross Margin Interest expenses Selling expenses Income before income tax Provisions from income tax Net income 2018 6577480 2573350 2354350 1649780 105165 868956 675659 296877 378782 2019 7622677 2803623 2887616 1931438 102971 1225136 603331 274558 328773 The 2019 financial statements reflect the following transactions (Rs. in thousands) 170773 351112 728262 1250147 932828 2182975 42611 271452 430776 922990 1625218 880674 2505892 33828 1. Depreciation and amortization expense were Rs. 115974 2. Net income included a loss of Rs. 55215 resulting from sale of equipment 3. Net income included Rs. 55604 from Ritz's investment in a subsidiary; none of this income was received in cash 4. The year-end balance in deferred income tax was Rs. 17548 lowers than at the beginning of the year and it formed a part of long term liabilities in the balance sheet 5. New property, plant and equipment purchases totaled Rs. 260075, all paid for in cash. Disposals of fixed assets generated Rs. 33162 cash proceeds 6. Acquisition of another company was made for cash resulted in additional depreciable assets of Rs. 31691 and goodwill of Rs. 102030 7. Dividends aggregating Rs. 216158 were paid in cash. In addition, the company gave its shareholders as dividend a number of shares equal to his holdings. 8. The firm spent Rs. 30609 to purchase treasury stock and some of these were reissued to the employees as bonus 9. The firm increased its short-term debt as indicated in the balance sheet. The long- term borrowings were reduced by Rs. 34606 Question 1: Validate ROE using Dupont analysis