Question

Use the following financial statements for Lake of Egypt Marina, Inc.

LAKE OF EGYPT MARINA, INC. Balance Sheet as of December 31, 2015 and 2014 (in millions of dollars)
	2015			2014				2015			2014
Assets							Liabilities and Equity
Current assets:							Current liabilities:
Cash and marketable securities	$	50		$	56		Accrued wages and taxes	$	50		$	48
Accounts receivable		60			52		Accounts payable		55			44
Inventory		205			96		Notes payable		60			40
Total	$	315		$	204		Total	$	165		$	132
Fixed assets:							Long term debt:	$	42		$	136
Gross plant and equipment	$	250		$	232		Stockholders’ equity:
Less: Depreciation		90			60		Preferred stock (4 million shares)	$	4		$	4
							Common stock and paid-in surplus        (24 million shares)		24			24
Net plant and equipment	$	160		$	172		Retained earnings		265			104
Other long-term assets		25			24
Total	$	185		$	196		Total	$	293		$	132
Total assets	$	500		$	400		Total liabilities and equity	$	500		$	400

LAKE OF EGYPT MARINA, INC. Income Statement for Years Ending December 31, 2015 and 2014 (in millions of dollars)
	2015			2014
Net sales (all credit)	$	600		$	400
Less: Cost of goods sold		216			120
Gross profits	$	384		$	280
Less: Other operating expenses		36			24
Earnings before interest, taxes, depreciation, and amortization (EBITDA)	$	348		$	256
Less: Depreciation		30			24
Earnings before interest and taxes (EBIT)	$	318		$	232
Less: Interest		48			32
Earnings before taxes (EBT)	$	270		$	200
Less: Taxes		81			60
Net income	$	189		$	140
Less: Preferred stock dividends	$	4		$	4
Net income available to common stockholders	$	185		$	136
Less: Common stock dividends		24			24
Addition to retained earnings	$	161		$	112
Per (common) share data:
Earnings per share (EPS)	$	7.710		$	5.670
Dividends per share (DPS)	$	1.000		$	1.000
Book value per share (BVPS)	$	12.040		$	5.330
Market value (price) per share (MVPS)	$	15.550		$	13.350

Construct the DuPont ROA and ROE breakdowns for Lake of Egypt Marina, Inc. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

DuPont Analysis
ROA	%
ROE	%

Answer 1

Profit margin
net margin is the revenue that remains after subtracting all operating expenses, taxes, interest and preferred stock dividends from a company's total revenue.
Profit margin	=	185
Asset turnover ratio	=	Sales or Total revenue/Total Assets
	=	600/500
	=	1.2
Equity multiplier	=	Total assets/total stockholder'sequity
	=	500/293
	=	1.706485
ROE	=	Profitmargin*Asset turnover ratio*Equity multiplier
	=	185*1.2*1.706485
	=	378.8397
ROA	=	Net income/Average total Assets
	=	189/(500+400)/2
	=	189/450
	=	0.42 Income - income after taxes