Use the following financial statements for Lake of Egypt Marina, Inc. Construct

Question

Use the following financial statements for Lake of Egypt Marina, Inc.

Construct the DuPont ROA and ROE breakdowns for Lake of Egypt Marina, Inc. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Use the following financial statements for Lake of Egypt Marina, Inc. LAKE OF EGYPT MARINA, INC. Balance Sheet as of December 31, 2015 and 2014 (in millions of dollars) 2015 2014 2015 2014 Assets Liabilities and Equity Current assets: Current liabilities: Cash and marketable securities $ 96 $ 60 Accrued wages and taxes $ 48 $ 60 Accounts receivable 88 66 Accounts payable 56 72 Inventory 248 156 Notes payable 64 78 Total $ 432 $ 282 Total $ 168 $ 210 Fixed assets: Long term debt: $ 252 $ 180 Gross plant and equipment $ 416 $ 330 Stockholders’ equity: Less: Depreciation 88 48 Preferred stock (6 million shares) $ 6 $ 6 Common stock and paid-in surplus (48 million shares) 48 48 Net plant and equipment $ 328 $ 282 Retained earnings 326 156 Other long-term assets 40 36 Total $ 368 $ 318 Total $ 380 $ 210 Total assets $ 800 $ 600 Total liabilities and equity $ 800 $ 600 LAKE OF EGYPT MARINA, INC. Income Statement for Years Ending December 31, 2015 and 2014 (in millions of dollars) 2015 2014 Net sales (all credit) $ 800 $ 600 Less: Cost of goods sold 368 240 Gross profits $ 432 $ 360 Less: Other operating expenses 40 24 Earnings before interest, taxes, depreciation, and amortization (EBITDA) $ 392 $ 336 Less: Depreciation 40 36 Earnings before interest and taxes (EBIT) $ 352 $ 300 Less: Interest 32 30 Earnings before taxes (EBT) $ 320 $ 270 Less: Taxes 96 81 Net income $ 224 $ 189 Less: Preferred stock dividends $ 6 $ 6 Net income available to common stockholders $ 218 $ 183 Less: Common stock dividends 48 48 Addition to retained earnings $ 170 $ 135 Per (common) share data: Earnings per share (EPS) $ 4.540 $ 3.810 Dividends per share (DPS) $ 1.000 $ 1.000 Book value per share (BVPS) $ 7.790 $ 4.250 Market value (price) per share (MVPS) $ 15.350 $ 13.150 Construct the DuPont ROA and ROE breakdowns for Lake of Egypt Marina, Inc. (Do not round intermediate calculations. Round your answers to 2 decimal places.) DuPont Analysis ROA % ROE %

Use the following financial statements for Lake of Egypt Marina, Inc.

Explanation / Answer

Average Total Assets=(800+600)/2= $700 Average Total Equity=(380+210)/2 $        295 Net Income $        224 Net Income available to equity holders $        218 ROE(Return on Equity)=Net Profit margin*Asset Turnover Ratio*Financial Leverage ROE=(Net Income/Sales)*(Sales/Total assets)*(Total assets/Total Equity) ROE=(218/800)*(800/700)*(700/295) 0.738983 ROE= 73.90% ROA=Net Income /Total Assts=224/700 0.32 ROA= 32.0%

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