HI, can you please solve the e and f based on this information .

Based on the last 5 years financial statements, find the selected corporations:

1. Year-on-year growth (2.5 marks)

Answer:

Year-on-year growth = (Current Year Earnings Last Years Earnings) / Last Years Earnings x 100

Year-on-year growth

2016= (14000004423000) / 4423000 x 100 = - 68.3%

2017= (4770001400000) / 1400000 x 100= - 65.9%

2018= (2368000477000)/ 477000 x 100= 396.4%

2019= (36870002368000) /2368000 x 100 = 55.7%

2020= (44950003687000) / 3687000 x 100 = 21.9%

2. Average retention ratio, ROA and ROE (4.5 marks)

Answer:

Average retention ratio = retained earning / net earning

2016= 25570000/ 1400000 = 18.26

2017= 23980000/477000= 50.27

2018=24560000/2368000= 10.37

2019=25850000/3687000=7.01

2020=27630000/4495000=6.15

ROA

ROA= Net Income / Total assets

2016= 1400000 / 52666000= 2.7%

2017=477000/76250000=0.6%

2018=2368000/67173000=3.5%

2019= 3687000/67887000=5.4%

2020= 4495000/72548000=6.2%

ROE

ROE= Net Income / shareholder equity.

2016= 1400000 / 20717000= 6.8%

2017=477000/31098000=1.5%

2018=2368000/30722000=7.7%

2019= 3687000/31301000=11.8%

2020= 4495000/33003000=13.6%

3. Based on your finding in (b), the internal growth rate (2 mark)

Answer:

The internal growth rate = ROA /Average retention ratio

2016=2.7% / 18.26 = 0.15%

2017=0.6% / 50.27 =0.01%

2018= 3.5% / 10.37 =0.34%

2019= 5.4 % / 7.01 =0.77%

2020= 6.2% / 6.15 =1%

4. Based on your finding in (b), the sustainable growth rate (2 mark)

Answer:

The sustainable growth rate = ROE x Average retention ratio.

2016=6.8% x 18.26 = 1.24

2017=1.5% x 50.27 =0.75

2018= 7.7% x 10.37 = 0.8

2019= 11.8% x 7.01 =0.83

2020= 13.6% x 6.15 =0.84

5. Critically discuss the companys growth based on your findings in a, c and d. (4 marks)
6. Should the HC company plan to grow the business through acquisition or merger, suggest a potential target corporation and justify the rationale, benefits and expected synergies from this acquisition or merger? (10 Marks)