Question 29 (3.3 points) Use the following information for this question (the given information is the same as in the previous question): Little Gorilla, Inc. Year 2 Income Statement ($ in million) Sales $9,625 Less: Cost of goods sold 5,225 Less: Depreciation 1.890 Earnings Before interest and taxes 2,510 Less: Interest paid 850 Taxable income 1,660 Less: Taxes 581 Net income $1,079 Dividends paid 400 $679 Addition to retained earnings Year 1 and Year 2 Balance Sheet (S in million) Year 1 Year 2 Year 1 Year 2 Cash $1,455 $260 Accounts payable $1,150 $2,863 Accounts rec. 2,460 3,975 Notes payable 2,600 1,628 Inventory 1,405 885 Total $3,750 $4,491 Total Long-term debt 7,000 7,600 Common stock 5,500 5,700 $5,320 $5,120 Net fixed assets 19.300 21.720 Total assets $24.620 $26,840 Accounts rec: Accounts receivables Retained earnings 8.370 9.049 Total liabilities and Equity $24.620 $20,840 What is the return on assets for Year 2? Total assets $24.620 $26,840 Accounts rec.: Accounts receivables Retained earnings 8.370 9.049 Total liabilities and Equity $24.620 $26,840 What is the return on assets for Year 2? A) 7.3% B) 7.8% C) 4.0% D) 4.4% If Little Gorilla, Inc. has a P/E ratio of 20 but an average company in the same industry has an P/E ratio of 15, we know that the future earnings growth of Little Gorilla is likely to be that of the average company. A) Lower than and then higher than B) Lower than C) Higher than D) The same as