Given the following financial statements for Voice-Soft, a voice recognition company, answer the questions. Income Statements Year
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Question:
Given the following financial statements for Voice-Soft, a voice recognition company, answer the questions.
Income Statements | |||
Year Ended December 31, | |||
20X2 | 20X1 | ||
Sales | 8000 | 5000 | |
Cost of goods sold (COGS) | 7300 | 4380 | |
EBITDA | 700 | 620 | |
Depreciation and Amortization | 200 | 120 | |
EBIT | 500 | 500 | |
Interest Expense | 75 | 100 | |
EBT | 425 | 400 | |
Taxes (20%) | 85 | 80 | |
Net Income | 340 | 320 |
Balance Sheets | |||
As of December 31, | |||
20X2 | 20X1 | ||
Assets | |||
Current assets: | |||
Cash | 300 | 20 | |
Short term investments | 460 | 100 | |
Accounts receivable | 640 | 400 | |
Inventories | 800 | 480 | |
Total current assets | 2200 | 1000 | |
Net plant and equipment | 1800 | 1500 | |
Total assets | 4000 | 2500 | |
| |||
Liabilities and Stockholders' Equity | |||
Current liabilities: | |||
Notes payable | 200 | 150 | |
Accounts payable | 600 | 350 | |
Total current liabilities | 800 | 500 | |
Long-term debt | 1200 | 750 | |
Total liabilities | 2000 | 1250 | |
Common equity: | |||
Common stock | 1800 | 1030 | |
Retained earnings | 200 | 220 | |
Total common equity | 2000 | 1250 | |
Total liabilities and stockholders' equity | 4000 | 2500 |
1.) Calculate ROE using the DuPont equation for Voice-Soft in 20X1 and 20X2.
2.) What caused the change in ROE between 20X1 and 20X2?
Related Book For
Principles Of Managerial Finance
ISBN: 978-0136119463
13th Edition
Authors: Lawrence J. Gitman, Chad J. Zutter
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