Reference no: EM132519402

Below is the information relating to Travel Accessories Limited ("TAL"):

Income Statement for the year to 31 December 2019 ($ in thousands)

Sales 280,000

Less: Cost of goods sold 160,000

Gross profit 120,000

Less: Depreciation 18,000

Earnings before interest and taxes 102,000

Less: Interest paid 7,200

Earnings before taxes 94,800

Less: Taxes 25,600

Net income 69,200

Additional information: Cash sales for the year ended 31 December 2019 was $7,400,000 Sales, cash sales and net income for year ended 31 December 2018 were $250,000,000, $5,600,000 and $50,800,000 respectively. The number of common stock outstanding during the year is 65,200,000.

Balance Sheets as at 31 December ($ in thousands)

                                               2019                 2018                                                2019                        2018

Cash                                  46,000             44,000        Accounts payable        62,000                 60,000

Accounts receivable             88,000             76,000              Long-term debt          88,000              88,000

Inventory                             64,000             54,000                  Common stock      140,000              130,000

Total current assets               198,000             174,000            Retained earning           40,000              36,000

Net fixed assets                   132,000                   140,000 . .

Total assets                        330,000                  314,000        Total liabilities & equity      330,000              314,000

Required:

Question (a) Construct the DuPont equation for years ended 31 December 2018 and explain the change in ROE.

Question (b) Calculate the dividend per share for year ended 31 December 2019.