IIYou manufactured 1,050 bikes and sold 1,000 of them for $200 each.

Labor is 90/bike, material 60/bike.Rent is 15,000.No debt, hence no interest cost.

Profits tax is 20%.

What are (after-tax) profits?

Calculate cash in and cash out.

Assume all profits are paid to owners.What is net change in cash?

Your starting balance sheet contained $100,000 in fixed assets and $30,000 in cash.Owners' equity wasthe full 130,000.What does your new balance sheet look like?

III.You have a toy store.Your assets consist of $10,400 in inventory, $1,000 in equipment (phones, computers, etc.) and $600 cash.You are capitalized with $10,000 owners' equity and $2,000 debt at 6%.Assume your only variable cost are the bikes you purchase from the manufacturer, $60/bike.Your fixedcosts total $2500.

During the year you purchased 240 bikes and sold them at $80/bike.But you only paid for half the bikesyou bought, the rest were sold to you "on credit."What is your ROE for the year?What does yourbalance sheet look like at the end of the year, assuming all profits are distributed to owners?