In this workout we're told that Corsica has investment in its balance sheet as follows We're then told the equity income is due to grow by 5% and the payout ratio is 20% If that's the case, what will be reported in the next balance sheet for equity affiliates? So we need to start by taking our beginning equity affiliate of 28,800 I then need to ask, what makes that go up? And what makes that go down? What makes it go up is equity income. So I'm going to take last year's equity income and I'm going to increase that by 5%, 4,536 However, what makes my equity affiliate value go down? Dividends received Remember our equity affiliate is paying out dividends and the value of it's going down So that's going to be 20% of my equity income I now need to put it altogether, so I take my beginning amount I add the equity income, I subtract dividends received to get my ending figure And that's a good example of BASE analysis, where you take a beginning figure, add, subtract to get to your ending figure