4. Financial statements for Melman: (Amounts in millions) Melman KsgA 2016 33,600 32.000 28,800 27800 2017 35,200 2018 40,000 Cost of Sales Gross Profit Selling, general and administrative expenses Operating Income Interest and other nonoperating expense Earnings before income taxes Income tax Net Income 5,800 8,000 750 5,650 5,250 3,675 7,200 4,900 6,850 2.250 4,600 4,520 1350 Melman KsgA Balance Sheet (Amounts in Emillions) 2018 300 2,700 2017 230 2,000 2016 Cash and cash equivalents Accounts receivable 1,800 Inventories Total current assets 15,500 30,050 14.230 13,300 Net property, plant and equipment 30,170 29,500 2.000 44,800 Intangible assets Total assets 2.000 46,400 48,000 Accounts payable Accrued and other liabilities Taxes payable Total current liabilities Long-term debt 3,850 7,200 4,150 7,000 3,800 6,700 14,050 34,750 48,000 13,850 21.200 35,050 13,000 22.900 Total liabilities 35,900 Common shareholders' equity Total liabilities and equity 8,900 44,800 46,400 a) Calculate some financial ratios for Melman for 2016 and 2017 respectively. (Including ROE, net profit margin, total asset turnover, financial leverage, current ratio, and number of days of receivables) (6) 2018 2017 ROE Net profit margin 2017 2018 Total asset turnover Financial leverage Current ratio Number of days of receivables b) What was the major reason for the change in Melman's return on equity from 2017 to 2018? (4) c) What has been the trend in Melman's net profit margin from 2017 to 20187 (3) Bonus Questions (2.5) Smorgan KgaA, a German Corporation pays 100% of their net income in dividends to stockholders. Smorgan faces a 35% corporate tax rate. German personal tax rate on dividends is 50%, what is the effective tax rate on pretax income for Smorgan? a. 25.0% b. 32.5% c. 67.5% d. 85.0% 10