Comparative Balance Sheet Assets 2017 Liabilities& Stockholders 2018 2017 Fixed Assets Property, Plant and Equipment Goodwill Other Assets Total Fixed Assets 53,00056,000 Common Stock 51,880 53,000 4,20014,200 Preferred Stock 9,5200,240Retained Earnings 76,720 80,440 Total Shareholders' Equity 4,000 11,600 4,000 15,120 72,120 67,480 Long Term Liabilities 500 1,660 Long term debi 24,000 25,360 620 1,620 27,600 Cash and Cash Equivalents ts receivables 1,60014,000 Deferred tax liabilities 460 15,30014,820Other long- term liabilities Inventory Prepaid Expenses Other current assets Total Current Assets 540 660 Total Long-Term Liabilities 26,020 Short Term debt 3.420 3.600 29.22031,300 Accounts payable Accrual liabilitics Advances received Accrued tax payable Total Current Liabilities Total Liabilities 6,200 1,320 5,800 100 1,400 12,440 38,460 1,260 12,020 39,620 05,940 111,740 Total Assets 105,94011,740 Total Liabilities and Stockholders' Equit Comparative Income Statement: 2018 2017 91,360 102,250 (65,080) (80,420) 26.280 21.830 (2,700) (1,300) Sales Cost of Goods Sold Gross Profit Research and Development General and Administrative expenses Operating Expenses Operating Income Interest Expense Earnings before taxes Provision for taxes Net Income (8,160) (13,130) 18,120 8.700 (3,220) (2,200) 14.900 6.500 (4,200) (1,800) 10.700 4,700 The company has decided that the total preferred dividends for 2018 are 500,000 and for 2017 they are 300,000. The total assets of the company for 2016 are 128,430,000 and the total stockholders' equity amounts to 70,110,0006 Required 1. Compute the three basic components of the DuPont analysis regarding the Return on Equity (ROE), for company for 2018 and 2017. 2. Compute the ROE based on DuPont equation for 2018 and 2017 3. Describe how each of the three basic components of the DuPont analysis (regarding the Return on Equity), explains the change in the Return on Equity for company from 2017 to 2018 4. Can the level of debt affect the level of return on equity (ROE) 5. Are there any limitations concerning the assessment of Return on Equity (ROE) in analyzing profitability
