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Suppose BMS has sales of $16.56b, total cost of $3.75b, gross income of $12.81b, tax payment...

Suppose BMS has sales of $16.56b, total cost of $3.75b, gross income of $12.81b, tax payment amounting to $446m, and addition to retained earnings of $30m, how much money will the company need from the public if it wants to grow its income by 10%, assuming its current assets are worth $10.42b, it has net fixed assets of $4.41b, equity of $7.42, and liability and equity of $14.83b?

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Answer #1

Current EBIT = retained earnings + tax payment

                   = $30M +$446m

                   = $476M

Current Equity of the company is $7.42B

Current ROE of the company is $476M / $7.42B

                                              = 6.41%

Hence if the company wants to increase its earnings by 10% means increasing the earning by $476M * 10% = $47.6M

With ROE of 6.41%, the company would need from public, $47.5M * 100 /6.41 = $741.02M

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