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Balance Sheets as of December 31 2016 2015 $ 14,000 1 Cash and equivalents Accounts receivable Inventories 12,000 25,000 23,000 $71.705 60,000 48,000 $120,705 $108,000 30,000 27,705 Total current assets Net plant and equipment Total assets 49,000 Liabilities and Equity $ 10.9008,500 7,000 5.050 s 25,20020,550 20,000 s 45.200 40.550 40,000 27.450 $75.5055 67450 $108.000 Accounts payable 7.500 Notes payable 6.800 Total current liabilities Long-term bonds 20,000 Total liabilities Common stock (4,000 shares) Retained earnings 40,000 Common equity Total liabilities and equity 120,705$ Income Statement for Year Ending December 31, 2016 Operating costs excluding depreciation and amortization EBITDA $ 45,000 EBIT $ 42.000 EBT Taxes (40%) Net income Dividends paid Enter your answers in millions. For example, an answer of $25.000.000.000 should be entered as 25,000. 37.650 15.060 s 22.390 14,535 a. what was net operating working capital for 2015 and 20161
nter your answers in millions. For example, an answer of $25,000,000,000 should be entered as 25,000. a. What was net operating working capital for 2015 and 2016 million 2015 2016 $ million b. What was Arlingtons 2016 free cash flow? million c. Construct Arlingtons 2016 statement of stockholders equity. Retained Earnings Total Stockholders Equity Common Stock Shares Amount million million million million million million Balances, 12/31/15 2016 Net Income Cash Dividends Addition to retained ๑amings Balances, 12/31/16 million million million million $ million d. What was Arlingtons 2016 EVA? Assume that its after-tax cost of capital is 10%. Round your answer to two decimal places. million e. What was Arlingtons MVA at year-end 2016? Assume that its stock price at December 31, 2016 was $25. million
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Answer #1
a Net Operating Working Capital
Operating Assets 2016 2015
cash and cash equivalents $14,000 $12,000
Accounts Receivable $30,000 $25,000
Inventories $27,705 $23,000
Total Operating Assets $71,705 $60,000
Operating Liabilities
Accounts Payable $10,900 $8,500
Accurals $7,500 $7,000
Total operating Liabilities $18,400 $15,500
Net Operating Working Capital $53,305 $44,500
b Changes in Net Working Capital
2016 2015
Total Current Assets $71,705 $60,000
Less Total Current Liabilities $25,200 $20,550
Net Working Capital $46,505 $39,450
Changes in Net Working Capital $7,055 $46505-$39450
Capital Expenditure
Ending Plant and equipment $49,000
Add Depreciation $3,000
Less Begn Plant and Equipment $48,000
Capital Expenditure $4,000
NOPAT (EBIT *(1-T)) $42000*(1-.40)
$25,200
Add Depr and Amortization $3,000
$28,200
Less
Changes in working capital ($7,055)
Capital Expenditure ($4,000)
2016 Free Cash Flow $17,145
c Particulars Common Stock Retained earnings Total Stock Holders Equity
Shares Amount
Balance 12/31/2015 4000 million 40000 million 27450 million 67450 million
2016 Net Income 22590 Million
Cash Dividends -4535
Additions to Retained Earnings 8055 Million
balance 12/31/2016 75505 Million
d NOPAT (EBIT *(1-T)) $25,200 $42000*(1-.40)
Capital Invested (Total Assets) $120,705
After Tax Cost of Capital (WACC) 10%
Economic Value Added $13129.5 Million
EVA NOPAT-capital invested *WACC
$25200-$120705*10%
$13,129.50
e Total Shares OS 4000 million
Current market price per share $25
market capitalization $100,000 Million(4000 million *$25 =$100000 million
Less Total Common Equity on BS $75,505 Million Requirement C
Market Value Added MVA $24,495 Million
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