a) From the following financial data estimate net profit for shareholders of Delta Ltd for periods t+1, t+2 and t+3 using ROC and ROE analysis if the only change to equity capital is attributable to retention of profits (all else being equal). Lastly, calculate net profit for the period t+4 if at the beginning of the year Delta raised $5,000m in cash from a share issue (assuming no change to the D/B ratio). Income Statement Current year Previous year $m 4,250 1,275 $m 5,000 1,500 3,500 Revenues Cost of sales 2,975 Interest expense 285 259 550 468 Depreciation expense Other expenses Profit before tax 270 239 2,395 2,009 Taxation 479 402 1,607 Net profit Minority interests' share Parent shareholders' share 1,916 130 140 1,786 1,467 Balance Sheet Current year Previous year $m $m Current assets Cash 850 1,000 1,100 Inventory 950 Debtors 1,275 1,500 3,600 3,075 102331 Equity Valuation and Analysis (M) Semester 1 2017 Examinations Page 11 of 18 Non-current assets PPE 4,675 Investment in Associates 935 5,500 1,100 6,600 10,200 5,610 8,685 Total assets 1,600 Current Liabilities Accounts payable Interest-bearing debt Tax Payable 1,375 327 385 270 335 2,255 2,037 Non-current liabilities 3,850 3,273 Interest-bearing debt Other liabilities 150 200 Total Liabilities 4,000 6,255 3,945 3,473 5,510 3,175 Net assets 2,550 Equity Share capital Reserves Retained profits 2,630 110 115 385 1,100 3,765 3,125 Minority interests 180 50 Total Equity 3,945 3,175 a) From the following financial data estimate net profit for shareholders of Delta Ltd for periods t+1, t+2 and t+3 using ROC and ROE analysis if the only change to equity capital is attributable to retention of profits (all else being equal). Lastly, calculate net profit for the period t+4 if at the beginning of the year Delta raised $5,000m in cash from a share issue (assuming no change to the D/B ratio). Income Statement Current year Previous year $m 4,250 1,275 $m 5,000 1,500 3,500 Revenues Cost of sales 2,975 Interest expense 285 259 550 468 Depreciation expense Other expenses Profit before tax 270 239 2,395 2,009 Taxation 479 402 1,607 Net profit Minority interests' share Parent shareholders' share 1,916 130 140 1,786 1,467 Balance Sheet Current year Previous year $m $m Current assets Cash 850 1,000 1,100 Inventory 950 Debtors 1,275 1,500 3,600 3,075 102331 Equity Valuation and Analysis (M) Semester 1 2017 Examinations Page 11 of 18 Non-current assets PPE 4,675 Investment in Associates 935 5,500 1,100 6,600 10,200 5,610 8,685 Total assets 1,600 Current Liabilities Accounts payable Interest-bearing debt Tax Payable 1,375 327 385 270 335 2,255 2,037 Non-current liabilities 3,850 3,273 Interest-bearing debt Other liabilities 150 200 Total Liabilities 4,000 6,255 3,945 3,473 5,510 3,175 Net assets 2,550 Equity Share capital Reserves Retained profits 2,630 110 115 385 1,100 3,765 3,125 Minority interests 180 50 Total Equity 3,945 3,175
