Consider the following financial statements.

INCOME STATEMENT	2021	2022
Sales	$47,900	$55,085
Cost of Goods Sold	$28,600	$37,180
Depreciation	$3,950	$5,348
EBIT	$15,350	$12,557
Interest	$5,100	$8,919
EBT	$10,250	$3,638
Tax	$2,153	$764
Net Income	$8,097	$2,874
Dividends	$1,725	$1,868
Addition to Retained Earnings	$6,372	$1,006

BALANCE SHEET	2021	2022		2021	2022
Cash	$8,100	$6,480	Accounts Payable	$13,540	$14,894
Accounts Receivable	$7,750	$13,950	Current Liabilities	$13,540	$14,894
Inventory	$8,580	$9,438	Long-term Debt	$21,700	$45,570
Current Assets	$24,430	$29,868	Total Debt	$35,240	$35,240
			Retained Earnings	$6,900	$13,272
Fixed Assets	$46,600	$74,560	Common Stock	$28890	$30,692
			Total Equity	$35790	$43,964
Total Assets	$71,030	$104,428	Total Liabilities & Equity	$71,030	$104,428

Calculate ROE for each year.

2021: %

2022: %

Question 2

Use DuPont Analysis to decompose ROE.

• Profit Margin 2021: % 2022: %
• Total Asset Turnover 2021: 2022:
• Equity Multiplier 2021: 2022:

Which items warrant further investigation?

Responses

• Current Assets, Current Liabilities

• Costs, Current Assets, Fixed Assets

• Sales, Current Assets, Fixed Assets, Current Liabilities

• Sales, Costs, Fixed Assets, Current Liabilities