Calculate ROA and ROE ratios of your selected company for 3 years based on DuPont Ratio. Analyze the trend and explain the reason of the increase/decrease in those ratios.
Provide a table of three years Actual and five years forecast of income Statements of your selected company. Include the assumptions that you used for your forecast. For example how did you calculate future revenues, expenses, and other items and why?
Breakdown | 2019 | 2018 | 2017 | 2016 |
Total Revenue | 4'509'000 | 4'313'200 | 4'088'400 | 3'900'900 |
Cost of Revenue | 1'517'600 | 1'434'000 | 1'425'300 | 1'376'200 |
Gross Profit | 2'991'400 | 2'879'200 | 2'663'100 | 2'524'700 |
Operating Expenses | ||||
Selling General and Administrative | - | - | - | 0 |
Total Operating Expenses | 2'398'400 | 2'242'500 | 2'065'700 | 1'959'500 |
Operating Income or Loss | 593'000 | 636'700 | 597'400 | 565'200 |
Interest Expense | 35'000 | 18'800 | 15'600 | 14'100 |
Income Before Tax | 561'100 | 620'600 | 582'800 | 554'100 |
Income Tax Expense | 49'200 | 133'500 | 130'300 | 134'300 |
Income from Continuing Operations | 511'900 | 487'100 | 452'500 | 419'800 |
Net Income | 509'600 | 485'100 | 450'700 | 419'700 |
Net Income available to common shareholders | 509'600 | 485'100 | 450'700 | 419'700 |
EBITDA | 918'900 | 818'900 | 767'400 | 719'700 |
Intangible Assets | 603,700 | 602,100 | 610,000 | 620,800 |
Total non-current assets | 5,065,100 | 4,316,800 | 4,194,500 | 4,054,300 |
Total Assets | 8,040,800 | 7,249,800 | 6,975,600 | 6,428,800 |
Liabilities and stockholders' equity | ||||
Liabilities | ||||
Current Liabilities | ||||
Current Debt | 505,500 | 12,300 | 9,200 | 316,400 |
Accounts Payable | 233,900 | 214,200 | 217,300 | 180,400 |
Total Current Liabilities | 1,689,700 | 1,028,100 | 1,049,800 | 1,258,900 |
Non-current liabilities | ||||
Long Term Debt | 498,500 | 998,700 | 998,200 | 748,900 |
Deferred taxes liabilities | 541,500 | 467,000 | 444,200 | 433,500 |
Other long-term liabilities | 5,900 | 6,600 | 7,700 | 7,600 |
Total non-current liabilities | 1,680,900 | 1,735,300 | 1,730,800 | 1,495,900 |
Total Liabilities | 3,370,600 | 2,763,400 | 2,780,600 | 2,754,800 |
Stockholders' Equity | ||||
Common Stock | 24,300 | 24,300 | 24,100 | 23,700 |
Retained Earnings | 4,982,200 | 4,655,400 | 4,246,200 | 3,743,800 |
Total stockholders' equity | 4,659,800 | 4,477,300 | 4,186,300 | 3,667,200 |
Total liabilities and stockholders' equity | 8,040,800 | 7,249,800 | 6,975,600 | 6,428,800 |
Return on Assets (ROA) | |||||||||||
ROA=(Net Income /Sales)*(Sales/Average Total Assets) | |||||||||||
ROA=Net Profit Margin*Asset Turnover | |||||||||||
Average Total Assets=(Year Beginning Asset +Year Ending asset)/2 | |||||||||||
Average Total Assets 2017 | 6702200 | (6428800+6975600)/2 | |||||||||
Average Total Assets 2018 | 7112700 | (6975600+7249800)/2 | |||||||||
Average Total Assets 2019 | 7645300 | (7249800+8040800)/2 | |||||||||
2017 | 2018 | 2019 | |||||||||
A | Net Income | 450700 | 485100 | 509600 | |||||||
B | Sales | 4088400 | 4313200 | 4509000 | |||||||
C | Average Total Asset | 6702200 | 7112700 | 7645300 | |||||||
D=A/B | Net Profit Margin | 0.110239 | 0.112469 | 0.11301841 | |||||||
E=B/C | Asset Turnover | 0.610009 | 0.606408 | 0.58977411 | |||||||
ROA=D*E | Return on Assets | 0.067247 | 0.068202 | 0.06665533 | |||||||
Return on Assets Percentage | 6.72% | 6.82% | 6.67% | ||||||||
Return on Equity (ROE) | |||||||||||
ROE=(Net Income /Sales)*(Sales/Average Total Assets)*(AverageTotal Assets/Average Shareholder Equity) | |||||||||||
ROE=ROA*(AverageTotal Assets/Average Shareholder Equity) | |||||||||||
ROE=ROA*Financial Leverage | |||||||||||
Average Shareholder Equity 2017 | 3926750 | (3667200+4186300)/2 | |||||||||
Average Shareholder Equity 2018 | 4331800 | (4186300+4477300)/2 | |||||||||
Average Shareholder Equity 2019 | 4568550 | (4477300+4659800)/2 | |||||||||
2017 | 2018 | 2019 | |||||||||
F | ROA | 0.067247 | 0.068202 | 0.06665533 | |||||||
G | Average Total Assets | 6702200 | 7112700 | 7645300 | |||||||
H | Average Shareholder Equity | 3926750 | 4331800 | 4568550 | |||||||
I=G/H | Financial Leverage | 1.706806 | 1.641973 | 1.67346313 | |||||||
ROE=F*I | Return on Equity | 0.114777 | 0.111986 | 0.11154524 | |||||||
Return on Equity Percentage | 11.48% | 11.20% | 11.15% | ||||||||
Calculate ROA and ROE ratios of your selected company for 3 years based on DuPont Ratio....
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