Question
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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