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Scott Kelly is reviewing MasterToy’s financial statements in order to estimate its sustain- able growth rate. Using the information presented in Table 14.19:
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Identify and calculate the components of the DuPont formula.
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Calculate the ROE for 2013 using the components of the DuPont formula.
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Calculate the sustainable growth rate for 2013 from the firm’s ROE and plowback ratios.
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|
2012 |
2013 |
||
|
IncomeStatement |
|||
|
Revenue |
$4,750 |
$5,140 |
|
|
Cost of goods sold |
2,400 |
2,540 |
|
|
Selling, general, and administrative |
1,400 |
1,550 |
|
|
Depreciation |
180 |
210 |
|
|
Goodwill amortization |
10 |
10 |
|
|
Operating income |
$ 760 |
$ 830 |
|
|
Interest expense |
20 |
25 |
|
|
Income before taxes |
$ 740 |
$ 805 |
|
|
Income taxes |
265 |
295 |
|
|
Net income |
$ 475 |
$ 510 |
|
|
Earnings per share |
$ 1.79 |
$ 1.96 |
|
|
Average shares outstanding (millions) |
265 |
260 |
|
|
BalanceSheet |
|||
|
Cash |
$ 400 |
$ 400 |
|
|
Accounts receivable |
680 |
700 |
|
|
Inventories |
570 |
600 |
|
|
Net property, plant, and equipment |
800 |
870 |
|
|
Intangibles |
500 |
530 |
|
|
Total assets |
$2,950 |
$3,100 |
|
|
Current liabilities |
$ 550 |
$ 600 |
|
|
Long-term debt |
300 |
300 |
|
|
Total liabilities |
$ 850 |
$ 900 |
|
|
Stockholders’ equity |
2,100 |
2,200 |
|
|
Total liabilities and equity |
$2,950 |
$3,100 |
|
|
Book value per share |
$ 7.92 |
$ 8.46 |
|
|
Annual dividend per share |
0.55 |
0.60 |
