EAST COAST YACHTS 2017 Income Statement Sales Cost of goods sold Selling, genera
ID: 2825870 • Letter: E
Question
EAST COAST YACHTS 2017 Income Statement Sales Cost of goods sold Selling, general, and administrative Depreciation EBIT Interest expense EBT Taxes Net income $611,582,000 431,006,000 73,085,700 19,958,400 $87,531,900 11,000,900 $ 76,531,000 30,612,400 45,918,600 $ 17,374,500 s 28,544,100 Dividends Retained eamings EAST COAST YACHTS 2017 Balance Sheet Current assets Current liabilities 44,461,550 6,123,200 $50,584,750 $11,119,700 Accounts payable Cash and equivalents Accounts receivable Inventory Other 18,681,500Accrued expenses 20,149,650Total current liabilities 1,172,200 Total current assets 51,123,050 Fixed assets Long-term debt $169,260,000 $169,260,000 Property, plant, and equipment $457,509,600 Less accumulated depreciation (113,845,900) Net property, plant, and equipment $343,663,700 Total long-term liabilities Intangible assets and others 6,772,000 Stockholders' equity $350,435,700 Preferred stock Total fixed assets s 1,970,000 37,583,700 28,116,300 161,564,000 (47,520,000) $181,714,000 Common stock Capital surplus Accumulated retained earnings Less treasury stock Total equity Total assets $401,558,750 Total liabilities and shareholders' equity $401,558,750Explanation / Answer
1(a). The ROE is 14.06%. The retention rate of the company is 28544100/45918600 = . The sustainable ROE is 14.06 * 0.6216 = 8.74%.
The EFN will be 169,260,000 * 1.0874 = 184053324.
All items in the Income statement & BS should be increased by 8.74%.
1(b) Considering the current ROE, the growth rate of 20% seems unrealistic.Because the funds arent sufficent to give that growth rate. However if the company could improve on its operations & bring about operational leverage then that growth rate could be achieved.
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