FIN622 Help fall 2010

[IQ-test]

IF Total Assets = 6,000,000/- financed by 200,000 shares of Rs.20/- each.
Lets Say EBIT in year1 is Rs.800,000/- and in Year2 is Rs.1,200,000/- respectively.

Find ROE and EPS for year 1 and 2.
Return on equity = (EBIT / EQUITY) * 100
Year 1: (800,000 / 4000,000 ) * 100 = 20%
Year 2: (1200,000 / 4000,000) * 100 = 30%

EPS= earnings attributable to ordinary shareholders / no. of ordinary shareholders
Year 1: (800,000 / 200,000) = 4 per share
Year 2: (1200,000 / 200,000) = 6 per share