If you are given the following information about the year ended 2017 (previous year). Total assets = $120,000, Total Equity = $70,000, Sales = 150,000, Net income = $35,000

a- Calculate Golden Cups profitability for year ended 2017. Solution:

b- Calculate Golden Cups profitability for year ended 2018. Solution:

c- Based on your knowledge of determinants of corporate profitability (DuPont identity), did any significant change happen to Golden Cups profitability? Did it increase or decrease? What is the underlying reason behind the change, if any? Solution:

Consolidated Income Statement Golden Cup As of Dec 31st, 2018 Show your workings here Revenues (-) Cost of goods sold Gross margin (-) Marketing expenses (-) General and administrative expenses (-) Depreciation EBIT 160,000+80,000=240,000 50% of 240,000=120,000 Revenue - CGS 100,000/5 Given Final answer here 240,000 (120,000) 120,000 (20,000) (30,000) (4,000) 66,000 (-) Interest expenses EBT (-) Tax expenses Net income Dividends Additions to Retained Earnings 40,000/10 years GM- Marketing Expenses - General and Admin Expenses Depreciation 40,000*10% EBIT Interest Tax Rate 21%, EBT* (0.21) EBT Tax Expenses Given Net income- Dividends (4,000) 62,000 (13,020) 48,980 30,000 18,980 O Consolidated Income Statement Golden Cup As of Dec 31st, 2018 Show your workings here Revenues (-) Cost of goods sold Gross margin (-) Marketing expenses (-) General and administrative expenses (-) Depreciation EBIT 160,000+80,000=240,000 50% of 240,000=120,000 Revenue - CGS 100,000/5 Given Final answer here 240,000 (120,000) 120,000 (20,000) (30,000) (4,000) 66,000 (-) Interest expenses EBT (-) Tax expenses Net income Dividends Additions to Retained Earnings 40,000/10 years GM- Marketing Expenses - General and Admin Expenses Depreciation 40,000*10% EBIT Interest Tax Rate 21%, EBT* (0.21) EBT Tax Expenses Given Net income- Dividends (4,000) 62,000 (13,020) 48,980 30,000 18,980 O