Use the following financial statements for Lake of Egypt Marina, Inc. LAKE OF EG
ID: 2732429 • Letter: U
Question
Use the following financial statements for Lake of Egypt Marina, Inc.
LAKE OF EGYPT MARINA, INC.
Balance Sheet as of December 31, 2015 and 2014
(in millions of dollars)
2015
2014
2015
2014
Assets
Liabilities and Equity
Current assets:
Current liabilities:
Cash and marketable securities
$
40
$
36
Accrued wages and taxes
$
45
$
33
Accounts receivable
45
33
Accounts payable
40
27
Inventory
208
84
Notes payable
35
24
Total
$
293
$
153
Total
$
120
$
84
Fixed assets:
Long term debt:
$
211
$
117
Gross plant and equipment
$
260
$
168
Stockholders’ equity:
Less: Depreciation
78
39
Preferred stock (3 million shares)
$
3
$
3
Common stock and paid-in surplus
(18 million shares)
18
18
Net plant and equipment
$
182
$
129
Retained earnings
148
78
Other long-term assets
25
18
Total
$
207
$
147
Total
$
169
$
99
Total assets
$
500
$
300
Total liabilities and equity
$
500
$
300
LAKE OF EGYPT MARINA, INC.
Income Statement for Years Ending December 31, 2015 and 2014
(in millions of dollars)
2015
2014
Net sales (all credit)
$
650
$
450
Less: Cost of goods sold
390
261
Gross profits
$
260
$
189
Less: Other operating expenses
52
36
Earnings before interest, taxes, depreciation, and
amortization (EBITDA)
$
208
$
153
Less: Depreciation
39
27
Earnings before interest and taxes (EBIT)
$
169
$
126
Less: Interest
39
36
Earnings before taxes (EBT)
$
130
$
90
Less: Taxes
39
27
Net income
$
91
$
63
Less: Preferred stock dividends
$
3
$
3
Net income available to common stockholders
$
88
$
60
Less: Common stock dividends
18
18
Addition to retained earnings
$
70
$
42
Per (common) share data:
Earnings per share (EPS)
$
4.890
$
3.330
Dividends per share (DPS)
$
1.000
$
1.000
Book value per share (BVPS)
$
9.220
$
5.330
Market value (price) per share (MVPS)
$
15.600
$
13.400
Construct the DuPont ROA and ROE breakdowns for Lake of Egypt Marina, Inc. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
DuPont Analysis
ROA __________
%
ROE_____________
%
Use the following financial statements for Lake of Egypt Marina, Inc.
Explanation / Answer
Total Assets in 2015 = $500
Total Assets in 2014 = $300
Net Income in 2015 = $91
Net Income in 2014 = $63
Return on assets in year 2015 is calculated below:
Return on assets in 2015 = net Income in 2015 / Total Assets in 2015
= $91 / $500
= 18.2%
Return on assets in year 2015 is 18.2%.
Similarly
Return on assets in year 2014 is calculated below:
Return on assets in 2014 = net Income in 2014 / Total Assets in 2014
= $63 / $300
= 21%
Return on assets in year 2014 is 21%.
Again
Total equity in 2015 = $169
Total equity in 2014 = $99
Net Income in 2015 = $91
Net Income in 2014 = $63
Return on equity in year 2015 is calculated below:
Return on equity in 2015 = net Income in 2015 / Total equity in 2015
= $91 / $169
= 18.2%
Return on equity in year 2015 is 53.84%.
Similarly
Return on equity in year 2014 is calculated below:
Return on equity in 2014 = net Income in 2014 / Total equity in 2014
= $63 / $99
= 63.63%
Return on equity in year 2014 is 63.63%.
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