Question

The Golden Eagle Corporation has the following items on their income and balance sheets (values in tables are in thousands:

Balance Sheet Items
(Assets)

	Last Year	Two Years Ago
Cash	420	440
Accounts Receivable	520	460
Inventory	288	280
Total Current Assets
Fixed Assets	5400	4720
Depreciation	2295	2091
Net Fixed Assets

Balance Sheet Items
(Liabilities)

Accounts Payable	560	530
Notes Payable	80	97
Total Current Liabilities
Long Term Liabilities	1120	970
Total Liabilities
Preferred Stock	125	125
Common Stock	3202	3202
Retained Earnings	1380	1015
Total Liabilities and Equity

Income Statement Items

	Past Year	Two Years Ago
Sales	3000	2800
Cost of Goods Sold	1840	1780
Operating Expenses	575	540
Interest Paid	96	89
Taxes Paid	81	76
Preferred Stock Dividends Paid	94	21

Using the Dupont System of Analysis, what is the Return on Equity LAST YEAR for Golden Eagle? (show answers to two decimal places.)

Answer 1

The answer for above problem is explained below.

Net Income Profit margin = Net Sales met Income = $ 3000 - $ 1840 $575 - $96 - $81 - $94 net Income - $314 And Net sales = $3000 3) profit margin = $ 314 $ 3,000 on profit margin = 0.10466 Net Sales And Total Assets twin over = – Average total Assets Net Sales - $ 3,000 Total Assets = $420 + $520 + $ 288 + $ 5,400 - $ 2,295 Total Assets = $ 4,333

Total Assets turnover - $ 3,000 $ 4,333 .: Total Assets tuon over = 10.69236 And, Assets Financial leverage Total - Total $ 4, 333 equity Total Assets = Total equity = $125 + $3,202 Total equity - $ 3327 Financial leverage = $4,333 $ 3,327 : Financial leverage = (1. 30237) . Return on equity (ROE) : = (profit margin] x [Total Assets ( Financial - Turn over ) [leverage ] = (0.10466) * (0.69236] * [ 1.30 237] .: ROE = 0.09437 00 9.444]