Company B Consolidated Statement of Income (000) Year Ending May 31 1996 1997 1998 1999 2000 Revenues $3,930,984 $3,789,668 $4,760,834 $6,470,625 $9,186,539 Cost and Expenses Cost of sales $2,386,993 $2,301,423 $2,865,280 $3,906,746 $5,502,993 Selling & Administrative $922,261 $974,099 $1,209,760 $1,588,612 $2,303,704 Interest expense $25,739 $15,282 $24,208 $39,498 $52,343 Other income/expense $1,475 $8,270 $11,722 $36,679 $32,277 $3,336,468 $3,299,074 $4,110,970 $5,571,535 $7,891,317 Income before income taxes $594,516 $490,594 $649,864 $899,090 $1,295,222 Income taxes $229,500 $191,800 $250,200 $345,900 $499,400 Net income $365,016 $298,794 $399,664 $553,190 $795,822 Company B Consolidatd Balance Sheets (000) Year Ending May 31+A2:G25 1996 1997 1998 1999 2000 Assets Current Assets Cash & equivalents $291,284 $518,816 $216,071 $262,117 $445,421 A/R $667,547 $703,682 $1,053,237 $1,346,125 $1,754,137 Inventory $592,986 $470,023 $629,742 $931,151 $1,338,640 Deferred income tax $26,378 $37,603 $72,657 $93,120 $135,663 Prepaid items $42,452 $40,307 $74,221 $94,427 $157,058 total current assets $1,620,647 $1,770,431 $2,045,928 $2,726,940 $3,830,919 Property, Plant and Equipment $377,995 $405,845 $554,879 $643,459 $922,369 Goodwill $157,894 $163,036 $495,907 $474,812 $464,191 Other assets $30,927 $34,503 $46,031 $106,417 $143,728 Total assets $2,187,463 $2,373,815 $3,142,745 $3,951,628 $5,361,207 Liabilities and Stockholders' Equity Current Liabilities Current portion long term debt $52,985 $3,857 $31,943 $7,301 $2,216 Notes payable $108,165 $127,378 $397,100 $445,064 $553,153 Accounts payable $135,701 $210,576 $297,656 $455,034 $687,121 Accrued liabilities $138,563 $181,889 $345,224 $480,407 $570,504 Income tax payable $17,150 $38,287 $35,612 $79,253 $53,923 total current liabilities $452,564 $561,987 $1,107,535 $1,467,059 $1,866,917 Long term debt $15,033 $12,364 $10,565 $9,584 $296,020 Non-current deferred income taxes $29,965 $18,228 $17,789 $1,883 Other liabilities $43,575 $39,987 $41,867 $41,402 $42,132 Redeemable preferred stock $300 $300 $300 $300 $300 Stockholders' Equity Common stock- A $159 $159 $155 $153 $152 Common stock- B $2,720 $2,704 $2,698 $2,702 $2,706 Capital in excess of stated value $108,451 $108,284 $122,436 $154,833 $210,650 Foreign currency adjustment ($7,790) ($15,123) $1,585 ($16,501) ($31,333) Retained earnings $1,542,486 $1,644,925 $1,837,815 $2,290,213 $2,973,663 Shareholders' equity $1,646,026 $1,740,949 $1,964,689 $2,431,400 $3,155,838 Total Liabilities and Shareholders' Equity $2,187,463 $2,373,815 $3,142,745 $3,951,628 $5,361,207 As an aid to Sylvia, a) calculate the ROE through the four parts Dupont formula for the five years, for the Company B. b) Briefly comment on the trend of each company’s total ROE and each of the four components.

Company B Consolidated Statement of Income (000) Year Ending May 31 1996 1997 1998 1999 2000 Revenues $3,930,984 $3,789,668 $4,760,834 $6,470,625 $9,186,539 Cost and Expenses Cost of sales $2,386,993 $2,301,423 $2,865,280 $3,906,746 $5,502,993 Selling & Administrative $922,261 $974,099 $1,209,760 $1,588,612 $2,303,704 Interest expense $25,739 $15,282 $24,208 $39,498 $52,343 Other income/expense $1,475 $8,270 $11,722 $36,679 $32,277 $3,336,468 $3,299,074 $4,110,970 $5,571,535 $7,891,317 Income before income taxes $594,516 $490,594 $649,864 $899,090 $1,295,222 Income taxes $229,500 $191,800 $250,200 $345,900 $499,400 Net income $365,016 $298,794 $399,664 $553,190 $795,822 Company B Consolidatd Balance Sheets (000) Year Ending May 31+A2:G25 1996 1997 1998 1999 2000 Assets Current Assets Cash & equivalents $291,284 $518,816 $216,071 $262,117 $445,421 A/R $667,547 $703,682 $1,053,237 $1,346,125 $1,754,137 Inventory $592,986 $470,023 $629,742 $931,151 $1,338,640 Deferred income tax $26,378 $37,603 $72,657 $93,120 $135,663 Prepaid items $42,452 $40,307 $74,221 $94,427 $157,058 total current assets $1,620,647 $1,770,431 $2,045,928 $2,726,940 $3,830,919 Property, Plant and Equipment $377,995 $405,845 $554,879 $643,459 $922,369 Goodwill $157,894 $163,036 $495,907 $474,812 $464,191 Other assets $30,927 $34,503 $46,031 $106,417 $143,728 Total assets $2,187,463 $2,373,815 $3,142,745 $3,951,628 $5,361,207 Liabilities and Stockholders' Equity Current Liabilities Current portion long term debt $52,985 $3,857 $31,943 $7,301 $2,216 Notes payable $108,165 $127,378 $397,100 $445,064 $553,153 Accounts payable $135,701 $210,576 $297,656 $455,034 $687,121 Accrued liabilities $138,563 $181,889 $345,224 $480,407 $570,504 Income tax payable $17,150 $38,287 $35,612 $79,253 $53,923 total current liabilities $452,564 $561,987 $1,107,535 $1,467,059 $1,866,917 Long term debt $15,033 $12,364 $10,565 $9,584 $296,020 Non-current deferred income taxes $29,965 $18,228 $17,789 $1,883 Other liabilities $43,575 $39,987 $41,867 $41,402 $42,132 Redeemable preferred stock $300 $300 $300 $300 $300 Stockholders' Equity Common stock- A $159 $159 $155 $153 $152 Common stock- B $2,720 $2,704 $2,698 $2,702 $2,706 Capital in excess of stated value $108,451 $108,284 $122,436 $154,833 $210,650 Foreign currency adjustment ($7,790) ($15,123) $1,585 ($16,501) ($31,333) Retained earnings $1,542,486 $1,644,925 $1,837,815 $2,290,213 $2,973,663 Shareholders' equity $1,646,026 $1,740,949 $1,964,689 $2,431,400 $3,155,838 Total Liabilities and Shareholders' Equity $2,187,463 $2,373,815 $3,142,745 $3,951,628 $5,361,207 As an aid to Sylvia, a) calculate the ROE through the four parts Dupont formula for the five years, for the Company B. b) Briefly comment on the trend of each company’s total ROE and each of the four components.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Company B Consolidated Statement of Income (000)

Year Ending May 31		1996	1997	1998	1999	2000

Revenues		$3,930,984	$3,789,668	$4,760,834	$6,470,625	$9,186,539

Cost and Expenses
	Cost of sales	$2,386,993	$2,301,423	$2,865,280	$3,906,746	$5,502,993
	Selling & Administrative	$922,261	$974,099	$1,209,760	$1,588,612	$2,303,704
	Interest expense	$25,739	$15,282	$24,208	$39,498	$52,343
	Other income/expense	$1,475	$8,270	$11,722	$36,679	$32,277
		$3,336,468	$3,299,074	$4,110,970	$5,571,535	$7,891,317

Income before income taxes		$594,516	$490,594	$649,864	$899,090	$1,295,222

Income taxes		$229,500	$191,800	$250,200	$345,900	$499,400

Net income		$365,016	$298,794	$399,664	$553,190	$795,822

Company B Consolidatd Balance Sheets (000)

Year Ending May 31+A2:G25		1996	1997	1998	1999	2000
Assets
Current Assets
	Cash & equivalents	$291,284	$518,816	$216,071	$262,117	$445,421
	A/R	$667,547	$703,682	$1,053,237	$1,346,125	$1,754,137
	Inventory	$592,986	$470,023	$629,742	$931,151	$1,338,640
	Deferred income tax	$26,378	$37,603	$72,657	$93,120	$135,663
	Prepaid items	$42,452	$40,307	$74,221	$94,427	$157,058
	total current assets	$1,620,647	$1,770,431	$2,045,928	$2,726,940	$3,830,919

Property, Plant and Equipment		$377,995	$405,845	$554,879	$643,459	$922,369
Goodwill		$157,894	$163,036	$495,907	$474,812	$464,191
Other assets		$30,927	$34,503	$46,031	$106,417	$143,728
	Total assets	$2,187,463	$2,373,815	$3,142,745	$3,951,628	$5,361,207

Liabilities and Stockholders' Equity
Current Liabilities
	Current portion long term debt	$52,985	$3,857	$31,943	$7,301	$2,216
	Notes payable	$108,165	$127,378	$397,100	$445,064	$553,153
	Accounts payable	$135,701	$210,576	$297,656	$455,034	$687,121
	Accrued liabilities	$138,563	$181,889	$345,224	$480,407	$570,504
	Income tax payable	$17,150	$38,287	$35,612	$79,253	$53,923
	total current liabilities	$452,564	$561,987	$1,107,535	$1,467,059	$1,866,917

Long term debt		$15,033	$12,364	$10,565	$9,584	$296,020
Non-current deferred income taxes		$29,965	$18,228	$17,789	$1,883
Other liabilities		$43,575	$39,987	$41,867	$41,402	$42,132
Redeemable preferred stock		$300	$300	$300	$300	$300
Stockholders' Equity
	Common stock- A	$159	$159	$155	$153	$152
	Common stock- B	$2,720	$2,704	$2,698	$2,702	$2,706
	Capital in excess of stated value	$108,451	$108,284	$122,436	$154,833	$210,650
	Foreign currency adjustment	($7,790)	($15,123)	$1,585	($16,501)	($31,333)
	Retained earnings	$1,542,486	$1,644,925	$1,837,815	$2,290,213	$2,973,663
	Shareholders' equity	$1,646,026	$1,740,949	$1,964,689	$2,431,400	$3,155,838
Total Liabilities and Shareholders' Equity		$2,187,463	$2,373,815	$3,142,745	$3,951,628	$5,361,207

As an aid to Sylvia, a) calculate the ROE through the four parts Dupont formula for the five years, for the Company B.

b) Briefly comment on the trend of each company’s total ROE and each of the four components.

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