Question

XYZ Media, Inc. - Balance Sheet 2019 Actual 2020 Projected Cash Accounts Receivable Inventory Total Current Assets 30 S 360 S 360 $ 750 $ 42 504 504 1,050 Net Fixed Assets Total Asssets 750 1,500 $ $ 1,050 2.100 Accounts Payable Accruals Notes Payable Total Current Liabilities 75 $ 75 S 150 S 300 5 105 105 150 360 Long-term Debt 150 S 20 Common Stock Retained Earnings Total Liabilities and Owners Equity 750 $ 300 S 1,500 5 750 370 1,500 XYZ Media, Inc. - Income Statement 2019 Actual 2020 Projected Sales COGS Gross Margin S S 3,000.00 1,200.00 1,800.00 $ $ $ 4,200.00 1,680.00 2,520.00 General & Administrative Costs EBIT Interest EBT Taxes (259) Net Income 1,685.00 5 115.00 S 20.00 $ 95.00 $ 23.75 5 71.25 5 2.371.00 149.00 16.00 133.00 33.25 99.75 $ Dividends (30% of NI) Addition to Retained Earnings 21.38 $ 49.88 $ 29.93 69.83

24) Calculate the ROE for 2020…. What does it mean?

25) Additional Funds Needed for their projected growth in 2020.

AFN = (A*/S₀)ΔS – (L*/S₀)ΔS – MS₁(RR)

Answer 1

24]	ROE = Net income/Avg. Stockholders' equity = 99.75/((750+300+750+370)/2) =	9.19%
	ROE indicates the return that is earned on the equity
	shareholders' funds. It is the result of operational
	and financial leverage.
25]	AFN = (1500/3000)*1200-(150/3000)*1200-4200*(71.25/3000)*(1-30%) =	$                 470