Question
In: Accounting
The following are BAC Bhd.’s year end statement of financial position and statement of profit and...
The following are BAC Bhd.’s year end statement of financial position and statement of profit and loss for 2016 and 2017:
|
2017 ($) |
2016 ($) |
2017 ($) |
2016 ($) |
||
|
Non Current Assets: |
total non current liabilities |
410769 |
372931 |
||
|
Gross Non Current assets |
317,503 |
232,179 |
current liabilities |
||
|
Less accumulated depreciation |
54,045 |
34,187 |
short term borrowings |
288798 |
296149 |
|
Net Non Current assets |
263,458 |
197,992 |
A/P |
636318 |
414611 |
|
Current Assets: |
accruals |
106748 |
103362 |
||
|
cash and equivalents |
208323 |
102024 |
total Current libilities |
1031864 |
814122 |
|
A/R |
690294 |
824979 |
total liabilities |
1442633 |
1187053 |
|
inventories |
942374 |
715414 |
shareholder equity |
||
|
total Current assets |
1840991 |
1642417 |
common stock(100000 sahres) |
550000 |
550000 |
|
total assets |
2104449 |
1840409 |
retaines earning |
111816 |
103356 |
|
noncurrent liabilities |
total shareholder equity |
661816 |
653356 |
||
|
long term debt |
410769 |
372931 |
total liabilities and share holder equity |
2104449 |
1840409 |
|
2017 ($) |
2016 ($) |
|
|
Sales |
2,325,967 |
2,220,607 |
|
(-) Cost of goods sold |
1,869,326 |
1,655,827 |
|
Other expenses |
287,663 |
273,870 |
|
Total operating costs excluding depreciation and amortization |
2,156,989 |
1,929,697 |
|
Depreciation and amortization |
25,363 |
26,341 |
|
Total operating costs |
2,182,352 |
1,956,038 |
|
EBIT |
143,615 |
264,569 |
|
(-) Interest expense |
31,422 |
13,802 |
|
EBT |
112,193 |
250,767 |
|
(-) Taxes (30%) |
33,658 |
75,230 |
|
Net income |
78,535 |
175,537 |
Related items:
2017 Total dividends paid $70,075 , Stock price per share $15.60
2016 Total dividends paid $15.60 , Stock price per share $21.80
Required:
- Calculate the after tax operating income (i.e. after-tax EBIT) for 2016 and 2017.
- Calculate the net working capital (NWC) that is supported by non-free sources for 2016 and 2017, and the changes in NWC between these two years.
- What is free cash flow (FCF)? Calculate the FCF for 2017. Is a negative FCF always a bad sign?
- Calculate the following for the company for 2017:
- Earnings per share
- Dividends per share
- Book value per share
Solutions
Expert Solution
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| 2017 ($) | 2016 ($) | 2017 ($) | 2016 ($) | ||||
| Non Current Assets: | Sales | 2,325,967.00 | 2,220,607.00 | ||||
| Gross Non Current assets | 317,503.00 | 232,179.00 | (-) Cost of goods sold | 1,869,326.00 | 1,655,827.00 | ||
| Less accumulated depreciation | 54,045.00 | 34,187.00 | Other expenses | 287,663.00 | 273,870.00 | ||
| Net Non Current assets | 263,458.00 | 197,992.00 | Total operating costs excluding depreciation and amortization | 2,156,989.00 | 1,929,697.00 | ||
| Current Assets: | Depreciation and amortization | 25,363.00 | 26,341.00 | E | |||
| cash and equivalents | 208,323.00 | 102,024.00 | Total operating costs | 2,182,352.00 | 1,956,038.00 | ||
| A/R | 690,294.00 | 824,979.00 | EBIT | 143,615.00 | 264,569.00 | B | |
| inventories | 942,374.00 | 715,414.00 | (-) Interest expense | 31,422.00 | 13,802.00 | ||
| total Current assets | 1,840,991.00 | 1,642,417.00 | EBT | 112,193.00 | 250,767.00 | ||
| total assets | 2,104,449.00 | 1,840,409.00 | O | (-) Taxes (30%) | 33,658.00 | 75,230.00 | |
| noncurrent liabilities | Net income | 78,535.00 | 175,537.00 | L | |||
| long term debt | 410,769.00 | 372,931.00 | |||||
| total non current liabilities | 410,769.00 | 372,931.00 | Ans to a | 2017 ($) | 2016 ($) | ||
| current liabilities | EBIT | 143,615.00 | 264,569.00 | B | |||
| short term borrowings | 288,798.00 | 296,149.00 | (-) Taxes (30%) | 43,084.50 | 79,370.70 | C=B*30% | |
| A/P | 636,318.00 | 414,611.00 | after tax operating income (i.e. after-tax EBIT) | 100,530.50 | 185,198.30 | D=B-C | |
| accruals | 106,748.00 | 103,362.00 | |||||
| total Current labilities | 1,031,864.00 | 814,122.00 | |||||
| total liabilities | 1,442,633.00 | 1,187,053.00 | P | ||||
| shareholder equity | |||||||
| common stock(100000 shares) | 550,000.00 | 550,000.00 | |||||
| retained earning | 111,816.00 | 103,356.00 | |||||
| total shareholder equity | 661,816.00 | 653,356.00 | |||||
| total liabilities and share holder equity | 2,104,449.00 | 1,840,409.00 | |||||
| Ans to b | 2017 ($) | 2016 ($) | |||||
| total Current assets | 1,840,991.00 | 1,642,417.00 | |||||
| Less: cash | 208,323.00 | 102,024.00 | |||||
| Non Cash Current Assets | 1,632,668.00 | 1,540,393.00 | |||||
| total Current labilities | 1,031,864.00 | 814,122.00 | |||||
| Non cash Net Working Capital | 600,804.00 | 726,271.00 | |||||
| Changes in Non cash Net Working Capital | (125,467.00) | A | |||||
| Ans to c | |||||||
| What is free cash flow (FCF)? | |||||||
| Free cash flow to the firm (FCFF) represents the amount of cash flow from operations available for distribution after depreciation expenses, taxes, working capital, and investments are accounted for and paid. | |||||||
| FCFF is essentially a measurement of a company's profitability after all expenses and reinvestments. It is one of the many benchmarks used to compare and analyze a firm's financial health. | |||||||
| FCF formula= | After Tax EBIT+ Depreciation Expense- Capital Expenditures- Changes in Net Working Capital | ||||||
| After-tax EBIT | 100,530.50 | D | Capital Expenditures | ||||
| Depreciation and amortization | 25,363.00 | E | Opening Gross Value (2016): | 232,179.00 | F | ||
| Capital Expenditures | 90,829.00 | J | Less: Accumulated Depreciation (2016) | 34,187.00 | G | ||
| Changes in non cash Net Working Capital | (125,467.00) | A | Less: Depreciation and amortization (2017) | 25,363.00 | E | ||
| FCF | 160,531.50 | K=D+E-J-A | Net Book Value | 172,629.00 | H=F-G-E | ||
| Net Book Value (2017) given in Balance Sheet | 263,458.00 | I | |||||
| Ans to d | 2017 ($) | Capital Expenditures | 90,829.00 | J=I-H | |||
| Net income | 78,535.00 | L | |||||
| Dividend paid | 70,075.00 | M | |||||
| Book Value | 661,816.00 | N=O-P | |||||
| Number of shares | 100,000.00 | Q | |||||
| Earnings per share | 0.79 | R=L/Q | |||||
| Dividends per share | 0.70 | S=M/Q | |||||
| Book value per share | 6.62 | T=N/Q | |||||
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