Q3. Forecast Income Statement (8 mark) (1) We can cxpress retum on assets (ROA), defined as net income divided by assets, into the following decomposition formula: ROE - Operating ROA + (Operating ROA-Effective Interest Rate)*Financial Leverage + Unusual ROE Explain the economic intuition of this decomposition formula. Why is this decomposition formula useful? (3 mark) (2) ACCG Inc. reported sales $650,000 dollars in 2019. An analyst made forecast of the key items in income statement and balance sheet for 2020 as follows. (5 mark) Forecasted Key Items for ACCG Inc. Year 2020F Sales growth rate 3.0% NOPAT margin 4.0% 12.0% Net operating working capital to sales Net operating long-term assets to sales 20.0% Net debt to Net operating assets 24.0% After tax cost of debt 5.0% Suppose we agree with the above forecast, use these forecasted items to derive the forecast in 2020 and complete the following table. 2020F Income statement items (in $) Sales Net operating profit after tax Net interest expense Net income Balance sheet items (in $) Net working capital 80,340 Net long-term assets 133,900 Net operating assets 214,240 Net debt