Return on assets = $14,324,199 / $119,461,968 Return on assets = 11.99% Return on equity = $14,324,199 / $61,070,680 Return on equity = 23.45% The only ratios that changed are the debt ratio, the interest coverage ratio, profit margin, return on assets, and return on equity. The debt ratio changes because long-term debt is assumed to remain fixed in the pro forma statements. The other ratios change slightly because interest and depreciation are also assumed to remain constant as well. 4. Pro forma financial statements for next year ata 20 percent growth rate are: e statement Sales $200,772,000 COGS 141,492,000 Other expenses 23,992,800 Depreciation 5,460,000 EBIT $29,827,200 Interest 3,009,000 Taxable e $26,818,200 Taxes (40%) 10,727, e $16,090,920 Dividends $9,654,552 Add to RE 6,436,368
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