Information for Q4 c) and Q4 d) The financials of XYZ Limited are as below 710 120 Net sales COGS Gross profit Profit before interest & tax Interest Profit before tax Tax Profit after tax Dividends Retained earnings All figures in INR million 20x6 20x7 20x8 900 1100 1350 850 1050 190 250 300 200 250 50 55 70 70 145 180 17.5 36.25 45 52.5 108.75 135 13.5 32.75 47 39 76 88 Equity share capital (INR 10 par) Reserves and surplus Loan funds - Capital employed Net fixed assets Investments Net current assets 200 140 500 840 600 30 400 1030 200 216 550 966 700 20 430 1150 200 304 680 1184 900 40 450 1390 Market price of share figures at year end for 20x6, 20x7, 20x8 are 22, 44 and 52 respectively. Q4. c) Decompose the ROE for the above given financials for year 20x7 and 20x8 in term of three factors. Q4. d) Derive the PE ratio of the company using constant growth dividend model. Following assumptions can be made for the calculation. Risk free rate = 6 %, beta of the stock = 1.2, expected market return = 10 %. Dividend payout ratio should be the average dividend payout ratio of the above 20x7, & 20x8 year financials. ROE should be taken as the average ROE of the above 20x7, & 20x8 year financials