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Qestions 4 & 5

Refer to the income statement and balances sheet for Dolphin, Inc. to answer the following questions. Dolphin is a $600 milli
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Answer #1

4.

Invested Capital = Net working capital + property, plant and equipment

Net working capital = Current asset - Current liability

Current asset = Operating cash + account receivable + inventory

Current liability = accounts payable + accrued expenses

Invested Capital last year = [(22+220+330) - (275+165)] + 440 = [572-440]+440 = 572

Invested Capital current year = [(24+242+363) - (303+182)] + 484 = [629-485]+484 = 628

Average Invested Capital = (Invested Capital last year + Invested Capital current year) / 2

Average Invested Capital = (572 + 628) / 2 = 600

5.

NOPLAT = Operating profit (EBIT) * (1-tax rate)

= 121 * (1-30%) = 84.7 or 85 (rounded off)

ROIC = NOPLAT / Average invested capital

ROIC = 85/600 = 14.1%

Summary

4. Average Invested Capital = b) $600

5. NOPLAT and ROIC = d) $85, 14.1 percent.

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