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this was all the information on the question You are given the following information regarding ABC Corp for 2019: RETURN ON ASSETS 6.25% NET PROFIT
this was all the information on the question
You are given the following information regarding ABC Corp for 2019: RETURN ON ASSETS 6.25% NET PROFIT MARGIN 5.0% EQUITY MULTIPLIER 2.0x TOTAL ASSET TURNOVER 1.25x SALES $650.000 COST OF GOODS SOLD 50.0% TAX RATE 30.0% Assume that 1) Expenses for 2020 will increase above 2019 levels to the extent of $50,000, plus 5% of any incremental sales over and above 2019 sales. 2) The projected Gross Profit for 2020, for 2020's sales, is expected to be consistent with 2019 3) Additional Inventory in 2020 is anticipated to the extent of a 2x turn on 2020's incremental sales. Turn is related to Cost of Goods Sold. 4) 2020's anticipated Dividends will be paid to the extent of 40% of all 2020's after-tax income. 5) New equipment purchases are planned in 2020 at $100,000 6) Assume that 2020's Assets will increase only to the extent of 23 and #5 and that these assets will be funded solely by debt. Required: 1) What must ABC project as its 2020's sales in order to generate an additional 5% Return on Equity above last year's levels (2019's ROE +5%, not 2019's ROE @ 105%) 2) Prepare a projected "summary 2020 Profit and Loss Statement and Balance Sheet (general categories are fine) 3) Detail how you are able to prove out your 2020 Total Expenses and 2020 Asset levels against the prior year's 4) With consideration to the projected 2020 sales, please also calculate 2020's projected RETURN ON EQUITY (use the DuPont model) 2020's projected RETURN ON ASSETS 2020's projected NET PROFIT MARGIN 20020's projected EQUITY MULTIPLIER 20020's projected TOTAL ASSET TURNOVER You are given the following information regarding ABC Corp for 2019: RETURN ON ASSETS 6.25% NET PROFIT MARGIN 5.0% EQUITY MULTIPLIER 2.0x TOTAL ASSET TURNOVER 1.25x SALES $650.000 COST OF GOODS SOLD 50.0% TAX RATE 30.0% Assume that 1) Expenses for 2020 will increase above 2019 levels to the extent of $50,000, plus 5% of any incremental sales over and above 2019 sales. 2) The projected Gross Profit for 2020, for 2020's sales, is expected to be consistent with 2019 3) Additional Inventory in 2020 is anticipated to the extent of a 2x turn on 2020's incremental sales. Turn is related to Cost of Goods Sold. 4) 2020's anticipated Dividends will be paid to the extent of 40% of all 2020's after-tax income. 5) New equipment purchases are planned in 2020 at $100,000 6) Assume that 2020's Assets will increase only to the extent of 23 and #5 and that these assets will be funded solely by debt. Required: 1) What must ABC project as its 2020's sales in order to generate an additional 5% Return on Equity above last year's levels (2019's ROE +5%, not 2019's ROE @ 105%) 2) Prepare a projected "summary 2020 Profit and Loss Statement and Balance Sheet (general categories are fine) 3) Detail how you are able to prove out your 2020 Total Expenses and 2020 Asset levels against the prior year's 4) With consideration to the projected 2020 sales, please also calculate 2020's projected RETURN ON EQUITY (use the DuPont model) 2020's projected RETURN ON ASSETS 2020's projected NET PROFIT MARGIN 20020's projected EQUITY MULTIPLIER 20020's projected TOTAL ASSET TURNOVER Step by Step Solution
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