Part A: Ratio Analysis Attached are the financial statements for Smith Company, Inc. Use the financial statements to answer the questions belowCalculate and interpret the return on assets using the Dupont Method for the four years of data.
Calculate and interpret the return on equity using the Modified Dupont Method all four years of data.
Information for calculating the ROA and ROE using the Dupont Method for three competitors to Smith Company, Inc. is also provided below. You will use this information in Part D.Format Table(2018)Competitor 1Competitor 2Competitor 3Net Profit Margin0.0820.110.03Total Asset Turnover0.880.90.55ROA0.072160.0990.0165FLM3.32.55.5ROE0.2381280.24750.09075Part B: Stock Valuation Use the information provided to calculate the required rate of return on four stocks. Use both CAPM and the Dividend Discount Model. The market return is expected to be 8.5% and the risk-free rate is 2.0%.
Format TableSmith Company, Inc.Competitor 1Competitor 2Competitor 3Beta1.41.71.20.9Dividend$2.00$3.25$2.00$1.25Price$26.00$33.00$45.00$20.00Growth3.5%3.5%5.5%1.5%Part C: Dividend PolicyUse the information provided to discuss the dividend policy of the four listed firms over the past four years.
Format Table 2018201720162015Smith Company, Inc. Dividend$2.00$2.00$2.00$2.00 Net Income$3,978,000$4,931,000$5,220,000$5,652,000Competitor 1 Dividend$3.25$0.75$1.20$1.00 Net Income$6,111,000$5,408,000$5,576,000$5,456,000Competitor 2 Dividend$2.50$2.50$2.00$1.00 Net Income$5,547,000$5,160,000$4,823,000$4,637,000Competitor 3 Dividend$1.25$0.55$0.55$0.55 Net Income$4,543,000$3,786,000$3,711,000$3,657,000Part D: AnalysisYou are working as a financial analyst. Your manager has asked you to prepare a presentation on whether Smith Company, Inc. is a good investment opportunity. Prepare a presentation, a minimum of one slide for each part, summarizing your results. You should submit either an Excel or Word document showing your work for each part
Requirements: 9-10 Pages and at least 9 cited sources. APA FORMAT
