1) Hi, this is part 2. Appreciate with your help and answers. Thanks 2) 3) 4) 5)
ID: 2637469 • Letter: 1
Question
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Hi, this is part 2. Appreciate with your help and answers. Thanks
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Use the following information to answer this question Windswept, Inc. 2010 Income Statement ($ in millions Net sales Less: Cost of goods sold Less: Depreciation Earnings before interest and taxes Less: Interest paid Taxable Income $ 10,000 7,950 47 $1,580 10 $1,48 ess: Taxes Net income $ 962 Winds Inc. 2009 and 2010 Balance Sheets ($ in millions 2009 2010 2009 2010 $ 1,610 $ 1,805 $ 280 1,11 1,78 S 31 1,74 4,06 ounts payable nts rec 1,010 Long-term debt Inventory mon stock $ 3,360 $ 3,030 170 3,520 $ 3,070 Retained earnings 65 90 otal Net fixed assets Total assets S 3, $ 6,690 $7,130 Total liab. & equity $ 6,69 What is the return on equity for 2010? 30.11 percent 24.48 percent 52.15 percent 31.75 percent 40.20 percentExplanation / Answer
1. Retrun on equity(ROE) = net income / Equity + Retained Earning = 962/(3030+900) = 0.2448= 24.48%
2. ROE = 976/(3200+1050) = 0.2296 = 22.96%
3. Net Income = Total equity * ROE = 5600*0.23 = 1288
4. Total Equity = Total Debt / Debt equity ratio = 11200/0.35 = 32000
ROE = 2200/32000 = 0.06875= 6.88%
5. No of days = (inventory/cost of goods sold)*365 = (498/2130)*365 = 85.34 days
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