A) Compute the return on equity (ROE) of Ka Ming Metal Manufacturing Ltd. (KM) and SunTool Metal Engineering works Ltd. (ST) during the year of 2021 using Du Pont Identityformula. Compare and explain the differences of THREE components being measuredbetween the two companies. [within 150 words]B) Ka Ming Metal Manufacturing Ltd. (KM) issued $2,000,000 in new long term debts with nochange in new equity sold in 2021, calculate the cash flow from assets.C)Name and calculate the maximum possible growth rate of Ka Ming Metal ManufacturingLtd. (KM) without external equity financing while maintaining a constant debt to equityratio. Question 3Ka Ming Metal Manufacturing Ltd. (KM) and Sun Tool Metal Engineering works Ltd. (ST) areheavy metal companies and reported the following financial statements for the year of 2021.Balance Sheet as at December 31, 2021KM$ST$Current assets27,500,00022,000,000Net fixed assets25,000,00017,000,000Total assets52,500,00039,000,000Current liabilities20,000,00015,000,000Long-term debt8,000,0008,000,000Total liabilities28,000,00023,000,000Shareholders' equityCommon stock15,500,0009,000,000Retained earnings9,000,0007,000,000Total shareholders' equity24,500,00016,000,000Total liabilities and shareholder' equity52,500,00039,000,000Income Statement For the Year Ended December 31, 2021KM2$ST$Sales66,000,00048,000,000Cost of goods sold(35,000,000)(22,000,000)Selling and administrative(10,000,000)(10,000,000)Depreciation(8,000,000)(6,000,000)EBIT13,000,00010,000,000Interest(3,000,000)(1,900,000)Taxable income10,000,0008,100,000Таxes(2,800,000)(2,268,000)Net income7,200,0005,832,000Dividends2,000,0001,000,000Addition to retained earnings5,200,0004,832,000

Balance sheet and income statement of two companies C Ka Ming Metal Manufacturing Ltd. (KM) and…

Answered: A) Compute the return on equity (ROE)…

FINANCIAL ACCOUNTING

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ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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A) Compute the return on equity (ROE) of Ka Ming Metal Manufacturing Ltd. (KM) and Sun
Tool Metal Engineering works Ltd. (ST) during the year of 2021 using Du Pont Identity
formula. Compare and explain the differences of THREE components being measured
between the two companies. [within 150 words]

B) Ka Ming Metal Manufacturing Ltd. (KM) issued $2,000,000 in new long term debts with no
change in new equity sold in 2021, calculate the cash flow from assets.

C)Name and calculate the maximum possible growth rate of Ka Ming Metal Manufacturing
Ltd. (KM) without external equity financing while maintaining a constant debt to equity
ratio.

Question 3
Ka Ming Metal Manufacturing Ltd. (KM) and Sun Tool Metal Engineering works Ltd. (ST) are
heavy metal companies and reported the following financial statements for the year of 2021.
Balance Sheet as at December 31, 2021
KM
$
ST
$
Current assets
27,500,000
22,000,000
Net fixed assets
25,000,000
17,000,000
Total assets
52,500,000
39,000,000
Current liabilities
20,000,000
15,000,000
Long-term debt
8,000,000
8,000,000
Total liabilities
28,000,000
23,000,000
Shareholders' equity
Common stock
15,500,000
9,000,000
Retained earnings
9,000,000
7,000,000
Total shareholders' equity
24,500,000
16,000,000
Total liabilities and shareholder' equity
52,500,000
39,000,000
Income Statement For the Year Ended December 31, 2021
KM
2$
ST
$
Sales
66,000,000
48,000,000
Cost of goods sold
(35,000,000)
(22,000,000)
Selling and administrative
(10,000,000)
(10,000,000)
Depreciation
(8,000,000)
(6,000,000)
EBIT
13,000,000
10,000,000
Interest
(3,000,000)
(1,900,000)
Taxable income
10,000,000
8,100,000
Таxes
(2,800,000)
(2,268,000)
Net income
7,200,000
5,832,000
Dividends
2,000,000
1,000,000
Addition to retained earnings
5,200,000
4,832,000

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