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Quantitative Problem: Rosnan Industries' 2018 and 2017 balance sheets and income statements are shown below.
| Balance Sheets: |
| | 2018 | 2017 |
| Cash and equivalents | $90 | $75 |
| Accounts receivable | 275 | 300 |
| Inventories | 375 | 350 |
| Total current assets | $740 | $725 |
| Net plant and equipment | 2,000 | 1,490 |
| Total assets | $2,740 | $2,215 |
| | | |
| Accounts payable | $150 | $85 |
| Accruals | 75 | 50 |
| Notes payable | 140 | 165 |
| Total current liabilities | $365 | $300 |
| Long-term debt | 450 | 290 |
| Common stock | 1,225 | 1,225 |
| Retained earnings | 700 | 400 |
| Total liabilities and equity | $2,740 | $2,215 |
| Income Statements: |
| | 2018 | 2017 |
| Sales | $2,000 | $1,500 |
| Operating costs excluding depreciation | 1,250 | 1,000 |
| EBITDA | $750 | $500 |
| Depreciation and amortization | 100 | 75 |
| EBIT | $650 | $425 |
| Interest | 62 | 45 |
| EBT | $588 | $380 |
| Taxes (40%) | 235 | 152 |
| Net income | $353 | $228 |
| | | |
| Dividends paid | $53 | $48 |
| Addition to retained earnings | $300 | $180 |
| | | |
| Shares outstanding | 100 | 100 |
| Price | $25.00 | $22.50 |
| WACC | 10.00% | |
a. What is the firms 2018 current ratio? Round your answer to two decimal places.??
b.What is the firms 2018 net profit margin? Round your answer to four decimal places? %
c.What is the firms 2018 price/earnings ratio? Round your answer to two decimal places.
d.Using the DuPont equation, what is the firms 2018 ROE? Round your answer to two decimal places. %
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