Question

For the following financial statements, assume that COGS is always 70% of Sales, Interest Expense is always 10% of the previous years long term debt, Depreciation is always 20% of the previous years Net Fixed Assets, and taxes are always 25% of EBT.

Fill Chart out and then answer questions

	2015	2016	2017	2018
Net Working Capital	1000	1100	1200
Net Fixed Assets	4000	4700		6608
Long Term Debt	3000		3703	4105
Total Equity	2000	2625		3703
Sales		10000
COGS			7700
Depreciation		800		1152
EBIT			2360	2298
Interest		300	318
EBT			2043
Taxes		475		482
NI				1446
Capital Expennditures			2000
Dividends		800

What is 2018 COGS?
a.7600 b. 7925 c. 8050 d. 8400

What is Return on Equity in 2016?
a. 10% b. 25% c. 33% d. 50%

What is Additional Financing Needed in 2017?
a.175 b. 350 c. 525 d.700

What are Dividends in 2017?

a. 850 b. 900 c. 950 d. 1000

Answer 1

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NOTE: For finding additional financing required,

Additional Financing = Capital expenditure - (Last year's retained earnigs + present years retained earnings)

Reatained earnings = NI - Dividends

Return on equity = NI / shareholders equity