a) Calculate EBIT, EBT, Tax Expense, Net Income and Total Equity for each of the three years.

b) Calculate ROE for each year. What trend do you see in ROE and as an equity investor, do you like this trend?

c) Decompose ROE into 3-Levels for each year (Profit Margin, Return on Assets, and Equity Multiplier). Show that the DuPont Identity holds. What has driven the trend in ROE from part b, and how do you feel about it as an equity investor?

d) If you were the consultant of Paul Corporation, what would you suggest the company should watch out for in the future? How could they grow their ROE sustainably and where should they focus attention in the upcoming years?

Please Show Work. Thank You!

Table 6 contains incomplete Balance Sheet and Income Statement Information for Paul Corporation for the years 1993 through 1995. Paul Corporation's Tax Rate is 35%. Feel free to complete the table as you work through the problem. Table 6: Paul Corporation Financial Data Paul Corporation Income Statement Data Total Revenue Total Operating Expense 1993 1994 1995 $ 2,444 $ 2,877 $ 2,997 $ 2,251 $ 2,585 $ 2,441 EBIT Interest Expense $ 6 $ 12 $ 19 EBT Tax Expense Net Income 3487 5122 5574 Paul Corporation Balance Sheet Total Assets Total Equity Total Liabilities 1610 3204 3658