Integrated Holding Company's year-end financial statements are given below:

Integrated Holding Co KSCC | Balance Sheet |

Assets (KWD Thousands) 2019 2018 2017 2016 2015

Cash & Equivalents 1,788 4,770 3,845 1,422 1,441

Trade Receivable - Gross 16,058 15,868 16,968 13,785 10,654

Allowances for Doubtful Accounts - Trade (4,408) (2,605) (1,943) (1,121) (729)

Other Receivables 4,266 1,846 771 1,718 1,488

Inventory 860 1,034 864 762 871

Prepaid Expenses 688 852 587 784 314

Total Current Assets 19,252 21,765 21,093 17,351 14,039

Property/Plant/Equipment, Total - Gross 140,371 137,708 128,281 125,169 103,893

Accumulated Depreciation, Total (67,145) (64,318) (57,754) (49,316) (41,059)

Property/Plant/Equipment, Total - Net 73,226 73,390 70,527 75,853 62,835

Intangibles, Net 711 711 711 -- --

Total Assets 93,190 95,866 92,331 93,204 76,874

Liabilities (KWD Thousands)

Accounts Payable 3,997 14,433 8,179 1,095 8,268

Accrued Expenses 2,370 3,995 2,807 1,259 1,125

Short Term Debt 594 496 2,110 13,105 15,003

Current Portion of Long-term Debt 5,560 2,396 3,797 -- --

Other Current Liabilities 504 345 160 808 493

Total Current Liabilities 13,024 21,664 17,052 16,267 24,889

Long Term Debt 10,001 3,241 12,020 16,679 6,074

Other Long-term Liabilities 1,567 1,447 4,093 8,807 773

Total Liabilities 24,593 26,352 33,165 41,771 31,753

Shareholders Equity (KWD Thousands)

Common Stock 22,000 22,000 22,000 20,900 19,000

Additional Paid-In Capital 1,463 1,463 1,463 1,463 1,463

Retained Earnings 45,164 46,065 35,707 29,063 24,617

Other Equity items (30) (14) (4) 7 40

Total Equity 68,597 69,514 59,166 51,433 45,120

Total Liabilities & Shareholders' Equity 93,190 95,866 92,331 93,204 76,874

Integrated Holding Co KSCC | Income Statement

(KWD Thousands) 31-Dec-2019 31-Dec-2018

Revenue 29,595 41,961

Cost of Revenue (18,137) (21,878)

Gross Profit 11,458 20,083

Selling/General/Admin. Expenses, Total (1,674) (3,748)

Depreciation/Amortization (262) (199)

Unusual Expense (Income) (715) 813

Impairment-Loss on Assets Held for Sale (2,093) (586)

Loss (Gain) on Sale of Assets 1,378 1,398

Other Operating Income (Expense) 53 1,173

Operating Income 8,860 18,121

Interest Expense (34) --

Investment Loss (490) (347)

Income Before Taxes 8,335 17,774

Income Taxes (437) (538)

Net Income After Taxes 7,899 17,236

QUESTION 1) Using the data provided in the financial statements of Integrated Holding Co.

a) Calculate the ratios in the table

b) Comment on the table briefly (Do not tell only this increased this decreased, develop your paragraph considering the links between the accounts and their effects on ROE.

Traditional decomposition of ROE

(For help see Table 5.2 in your textbook) 2019 2018 2017 2016 2015

Net profit margin (ROS)

Asset turnover

= Return on assets (ROA)

Financial leverage (also known as Equity multiplier)

= Return on equity (ROE)

QUESTION 2) How much is Integrated Holding Co's Total Depreciation Expense for year 2019 and 2018? Why don't we see those total amounts on the income statement?

QUESTION 3) Using the data provided in the financial statements

a) Prepare common size income statement for Integrated Holding Company

b) Comment on your findings briefly. (Do not tell only this increased this decreased, develop your paragraph considering the links between the accounts and their effect on the profitability of the company.

Common-sized income statement and profitability ratios

31-Dec-2019 31-Dec-2018

Revenue

Cost of Revenue

Gross Profit

Selling/General/Admin. Expenses, Total

Depreciation/Amortization

Unusual Expense (Income)

Impairment Loss on-Assets Held for Sale

Loss (Gain) on Sale of Assets

Other Operating Income (Expense)

Operating Income

Interest Expense

Investment Loss

Income Before Taxes

Income Taxes

Net Income After Taxes