Question 2 A&B Corporation has prepared the following forecasted 2022 financial statements based on the assumptions...

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Question 2 A&B Corporation has prepared the following forecasted 2022 financial statements based on the assumptions detailed below. A&B Corporation Financial Statements ($ millions) Income Statement Balance Sheet Forecasted Foreca 2021 2022 2021 Sales $5,000 $5,750 Cash $250 COGS 4,000 4,600 A/R 750 Operating expense 500 550 Inventory 1,500 1 EBIT 500 600 Total current assets 2,500 Interest expense 93 99 Net PP&E 2,000 22 2 EBT 407 501 Total assets 4,500 4 Tax 142 158 Net income $265 $343 Total debt 1,550 1 Shareholders' equity 2,950 3 Total liabilities & equity $4,500 $4 Assumptions Sales growth rate ?% COGS/sales 80.0% Retention ratio 60.0% PP&E/sales 40.0% 52.5% Total debt/equity Required: a) Calculate the company's profit margin. b) Calculate the company's asset turnover. c) Calculate the company's sustainable growth rate. d) What sales growth rate the company using in its forecasted financial statements? Question 2 A&B Corporation has prepared the following forecasted 2022 financial statements based on the assumptions detailed below. A&B Corporation Financial Statements ($ millions) Income Statement Balance Sheet Forecasted Foreca 2021 2022 2021 Sales $5,000 $5,750 Cash $250 COGS 4,000 4,600 A/R 750 Operating expense 500 550 Inventory 1,500 1 EBIT 500 600 Total current assets 2,500 Interest expense 93 99 Net PP&E 2,000 22 2 EBT 407 501 Total assets 4,500 4 Tax 142 158 Net income $265 $343 Total debt 1,550 1 Shareholders' equity 2,950 3 Total liabilities & equity $4,500 $4 Assumptions Sales growth rate ?% COGS/sales 80.0% Retention ratio 60.0% PP&E/sales 40.0% 52.5% Total debt/equity Required: a) Calculate the company's profit margin. b) Calculate the company's asset turnover. c) Calculate the company's sustainable growth rate. d) What sales growth rate the company using in its forecasted financial statements?