Calculate the profit margin, basic earning power (BEP), return on assets (ROA), and return on equity (ROE). How has the company’s profitability changed during the last year? A computer manufacturer...




Calculate the profit margin, basic earning power (BEP), return on assets (ROA), and return on equity (ROE). How has the company’s profitability changed during the last year?





A computer manufacturer has financial statements as follows:




































































































































































































































































































Income Statements for Year Ending December 31



 (Thousands of Dollars)




2019




2018



Sales



$945,000



$900,000



Expenses excluding depreciation and amortization



812,700



774,000



  EBITDA



$132,300



$126,000



Depreciation and amortization



33,100



31,500



  EBIT



$99,200



$94,500



Interest Expense



10,470



8,600



  EBT



$88,730



$85,900



Taxes (25%)



22,183



21,475



  Net income



$66,547



$64,425



Common dividends



$56,609



$54,115



Addition to retained earnings



$9,938



$10,310




Balance Sheets for Year Ending December 31



(Thousands of Dollars)





Assets




2019




2018



Cash and cash equivalents



$47,250



$45,000



Short-term investments



3,800



3,600



Accounts Receivable



283,500



270,000



Inventories



141,750



135,000



  Total current assets



$476,300



$453,600



  Net fixed assets



330,750



315,000



Total assets



$807,050



$768,600





Liabilities and equity



Accounts payable



$94,500



$90,000



Accruals



47,250



45,000



Notes payable



26,262



9,000



  Total current liabilities



$168,012



$144,000



Long-term debt



94,500



90,000



  Total liabilities



$262,512



$234,000



Common stock



444,600



444,600



Retained Earnings



99,938



90,000



  Total common equity



$544,538



$534,600



Total liabilities and equity



$807,050



$768,600




Other data



Tax rate



25%



  Shares outstanding                                                                               15,000,000


  Stock price                                                                                        $65 per share














WACC



8%




Jun 07, 2022
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