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Sasha Do is reviewing the financial statement of company AAA in order to estimate and analyse the companys performance for 2020. The following items are

Sasha Do is reviewing the financial statement of company AAA in order to estimate and analyse the companys performance for 2020. The following items are extracts from AAAs income statement and balance sheet.

Items

2020

Revenue

Operating Income

Net income

Earnings per share

Total Current Asset

Total asset

Total Current Liabilities

Long-term debt

Total liabilities

Total equity

Annual dividends per share

$402,000

$332,300

$76,550

$2.30

$100,100

$323,600

$13,300

$32,900

$46,200

$277,400

$0.78

Industry average

Total Asset turnover

Operating profit margin

Net profit margin

ROE

Payout ratio

Liquidity ratio

2.6

42%

10%

22%

20%

3.7

(a)

Identify and calculate DuPont components.

(b)

Determine the ROE for the year based on DuPont Components and calculate the companys plowback rate.

(c)

Calculate the companys plowback rate. Calculate the sustainable growth rate based on the firms ROE and plowback rate.

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