Income statement for the year ending 12/31/2021

Sales/revenues	1,750
Variable cost a.k.a. cost of goods sold (COGS)	(700)
Fixed cost a.k.a. selling general and administrative (SG&A)	(400)
Depreciation	(100)
EBIT	550
Interest expense	(100)
EBT	450
Taxes (40%)	(180)
Net Income	270

The NI belongs to the stockholders, assume that half is paid out in dividends and the rest is added to retained earnings.

- Dividends 135 (50% of net income in this case)

- Additions to retained earnings 135 (net income minus dividends)

Balance sheet on 12/31/2021:

Cash	100	A/P	200
A/R	150	Accruals	125
Inventory	250	Notes payable	100
Fixed assets	1,500	Long term debt	725
Common stock	50
Retained earning	800
Total assets	2,000	Total claims	2,000

Calculate the price to earnings ratio(P/E ratio) and ROE

Answer rating: 100% (QA)

1 Price to Earnings PE ratio Number of Shares is not given so the form... View the full answer