You have a friend who has been hired as an intern to assist the CFO of \"Simon Y
ID: 2638405 • Letter: Y
Question
You have a friend who has been hired as an intern to assist the CFO of "Simon Yu, Inc." with variety of financial analyses. It is almost year-end, and your friend has been assigned to calculate a few numbers for the CFO. Unfortunately, his dog ate some of the important data, and you have been asked to help him with his assignment.
"Simon Yu Inc." is a 100% equity firm, and usually falls under the 35% tax bracket. This fiscal year, the company realized total revenue of $1,650,000 and EBIT of $300,000. In the past, the cost of goods sold amounts to approximately 80% of its revenue.
Asset portion of Balance Sheet
2013
2014
Current Assets
225,000
407,000
Fixed Assets
130,000
150,000
Total Assets
1. Structure an income statement for Simon Yu, Inc. for 2014
2. What is ROA of the company for 2014?
3. What is the OCF for 2014?
4. Assume a payout ratio of 15%, and that cash dividends are the only kind of dividend the company offers, how much new equity did the company issue this year?
2013
2014
Current Assets
225,000
407,000
Fixed Assets
130,000
150,000
Total Assets
Explanation / Answer
Particulras Amount Total Assets 2013=225000+130000 355000 Total Assets 2014=407000+150000 557000 1>Profit after Tax in 2014=300000*(1-Tax Rate)=300000*(1-0.35) 195000 Profit after tax in 2013=1650000*(1-0.80)*(1-0.35) 214500 2>ROA in 2014=Profit after Tax/Assets in %=(195000/557000)*100 35.0 3>OCF in 2014=Profit after Tax 195000 4>Amount of Dividend paid in 2014=0.15*195000 29250 From this figure, it is not possible to find out the new equity issued by the company.
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