You are given the following income statements and balance sheets for Freddie M Corporation for fiscal years 2045 and 2046 (all figures are in £ million), Income Statement Balance Sheet Sales Cost of goods sold Gross margin Wage & salaries expense Depreciation expense Earnings before interest and tax Interest expenses Taxes Net income Dividends Change in shareholder's equity Assets: Cash & equivalents Receivables Inventories Current Assets Property, plant & equipment Accumulated depreciation Net property, plant & equip Total Assets 2045 2045 30.00 50.00 50.00 130.00 500.00 -100.00 400.00 -200.00 200.00 -50.00 -25.00 125.00 -25.00 -60.00 40.00 -16.00 24.00 2046 Liabilities: 2045 36.00 Payables 30.00 60.00 Short-term debt 100.00 200.00 60.00 Long-term debt 156.00 Total Liabilities 330.00 500.00 Paid-in capital 150.00 -125.00 Retained earnings 50.00 400.00 375.00 Shareholder's equity 200.00 530.00 531.00 Total Liability + Equity 530.00 2046 480.00 -240.00 240.00 -60.00 -25.00 155.00 -20.00 -70.00 65.00 -26.00 39.00 2046 36.00 56.00 200.00 292.00 150.00 89.00 239.00 531.00 You are also given that, The tax rate and the dividend payout ratio are unchanged for 2047 from 2046. The interest rates are 10% for the short-term debt and 5% for the long-term debt. Apart from the continuing depreciation value of £25 million per year from previous investments, there is a new plant purchase in 2047 of £100 million which is depreciated linearly over 4 years with zero salvage value. All new funding will be raised through short-term debt. (a) By assuming that items which are constant proportions of the sales in 2045 and 2046 will continue to be so in 2047, prepare the pro forma income statement and balance sheet for the fiscal year 2047 if the sales are forecasted to grow by 20%. (b) Construct the pro forma cash flow statement for 2047. (c) What was the firm's return on equity in 2046? (Use the average of year-beginning and year-end figures as the shareholders' equity value for the year.) As a shareholder of Freddie M, is this your preferred measure of corporate performance?