You are able to find a similar company (not exactly though) and want to compare this venture to it. The company has shown an average net profit margin of 6.5 percent, a sales-to-assets ratio of 1.3 times, and a total-debt-to-total-assets ratio of 55 percent over the 2014-2015 and 2015-2016 time periods. Compare and contrast in terms of the ROA and ROE models.

2016 SCANDI HOME FURNISHINGS, INC. INCOME STATEMENTS 2014 2015 Net sales $1,300,000 $1,500,000 Cost of goods sold 780,000 900,000 Gross profit 520,000 600,000 Marketing 130,000 150,000 General and administrative 150.000 150.000 Depreciation 40,000 53,000 EBIT 200,000 247.000 Interest 45,000 57,000 Earnings before taxes 155,000 190,000 Income taxes (40%) 62,000 76,000 Net income $ 93,000 $ 114,000 Cash Dividends $ $ 74,000 $1,800,000 1,260,000 540,000 200,000 200,000 60,000 80,000 70.000 10,000 4,000 6,000 $ 0 CA (continued on next pa 2016 mume rummings, 16. fer SCANDI HOME FURNISHINGS, INC. BALANCE SHEETS 2014 2015 Cash $ 50 000 $ 40,000 Accounts receivable 200.000 260.000 Inventories 450.000 500.000 Total current assets 700.000 800.000 Fixed assets, net 300,000 400.000 Total assets $1,000,000 $1.200.000 $ 10.000 360,000 600,000 970,000 500,000 $1,470,000 Accounts payable Accruals Bank loan Total current liabilities Long-term debt Common stock Retained earnings Total liabilities and equity $ 130,000 50,000 90.000 270,000 300,000 350,000 80,000 $1,000,000 $ 170,000 70,000 90.000 330,000 400,000 350,000 120,000 $1,200,000 $ 180,000 80,000 184,000 444,000 550,000 350,000 126,000 $1,470,000 *350,000 shares of common stock were issued to Kaj Rasmussen and the venture investors when Scandi Home Furnishings was incorporated in mid-2013 2016 SCANDI HOME FURNISHINGS, INC. INCOME STATEMENTS 2014 2015 Net sales $1,300,000 $1,500,000 Cost of goods sold 780,000 900,000 Gross profit 520,000 600,000 Marketing 130,000 150,000 General and administrative 150.000 150.000 Depreciation 40,000 53,000 EBIT 200,000 247.000 Interest 45,000 57,000 Earnings before taxes 155,000 190,000 Income taxes (40%) 62,000 76,000 Net income $ 93,000 $ 114,000 Cash Dividends $ $ 74,000 $1,800,000 1,260,000 540,000 200,000 200,000 60,000 80,000 70.000 10,000 4,000 6,000 $ 0 CA (continued on next pa 2016 mume rummings, 16. fer SCANDI HOME FURNISHINGS, INC. BALANCE SHEETS 2014 2015 Cash $ 50 000 $ 40,000 Accounts receivable 200.000 260.000 Inventories 450.000 500.000 Total current assets 700.000 800.000 Fixed assets, net 300,000 400.000 Total assets $1,000,000 $1.200.000 $ 10.000 360,000 600,000 970,000 500,000 $1,470,000 Accounts payable Accruals Bank loan Total current liabilities Long-term debt Common stock Retained earnings Total liabilities and equity $ 130,000 50,000 90.000 270,000 300,000 350,000 80,000 $1,000,000 $ 170,000 70,000 90.000 330,000 400,000 350,000 120,000 $1,200,000 $ 180,000 80,000 184,000 444,000 550,000 350,000 126,000 $1,470,000 *350,000 shares of common stock were issued to Kaj Rasmussen and the venture investors when Scandi Home Furnishings was incorporated in mid-2013