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FREE CASH FLOW Arlington Corporation's financial statements (dollars and shares are in millions) are provided here....
FREE CASH FLOW
Arlington Corporation's financial statements (dollars and shares are in millions) are provided here.
| Balance Sheets as of December 31 | |||
| 2016 | 2015 | ||
| Assets | |||
| Cash and equivalents | $ 14,000 | $ 13,000 | |
| Accounts receivable | 35,000 | 30,000 | |
| Inventories | 33,265 | 27,000 | |
| Total current assets | $ 82,265 | $ 70,000 | |
| Net plant and equipment | 49,000 | 45,000 | |
| Total assets | $131,265 | $115,000 | |
| Liabilities and Equity | |||
| Accounts payable | $ 10,800 | $ 9,500 | |
| Accruals | 7,700 | 7,000 | |
| Notes payable | 6,000 | 5,000 | |
| Total current liabilities | $ 24,500 | $ 21,500 | |
| Long-term bonds | 15,000 | 15,000 | |
| Total liabilities | $ 39,500 | $ 36,500 | |
| Common stock (4,000 shares) | 60,000 | 60,000 | |
| Retained earnings | 31,765 | 18,500 | |
| Common equity | $ 91,765 | $ 78,500 | |
| Total liabilities and equity | $131,265 | $115,000 | |
| Income Statement for Year Ending December 31, 2016 | |
| Sales | $231,000 |
| Operating costs excluding depreciation and amortization | 190,000 |
| EBITDA | $ 41,000 |
| Depreciation & amortization | 3,000 |
| EBIT | $ 38,000 |
| Interest | 1,950 |
| EBT | $ 36,050 |
| Taxes (40%) | 14,420 |
| Net income | $ 21,630 |
| Dividends paid | 8,365 |
Enter your answers in millions. For example, an answer of $25,000,000,000 should be entered as 25,000.
What was net operating working capital for 2015 and 2016?
| 2015 | $ million |
| 2016 | $ million |
What was Arlington's 2016 free cash flow?
$ million
Construct Arlington's 2016 statement of stockholders' equity.
| Common Stock | Retained Earnings |
Total
Stockholders' Equity |
||
| Shares | Amount | |||
| Balances, 12/31/15 | million | $ million | $ million | $ million |
| 2016 Net Income | million | |||
| Cash Dividends | million | |||
| Addition to retained earnings | million | |||
| Balances, 12/31/16 | million | $ million | $ million | $ million |
What was Arlington's 2016 EVA? Assume that its after-tax cost of
capital is 10%. Round your answer to two decimal places.
$ million
What was Arlington's MVA at year-end 2016? Assume that its stock
price at December 31, 2016 was $25.
$ million
Solutions
Expert Solution
- Net working capital : Total CA - (AP + Accruals)
2015 = 70,000 - (9,500 + 7,000) = $53,500
2016 = 82265 – (10,800 + 7,700) = $63,765
- Arlington's 2016 free cash flow: FCF= EBIT (1 – T) + Deprec. – Capital expenditures – ?NWC
2016 FCF = 38,000 ( 1 – 0.4 ) + 3,000 - 7,000 - 10,265 = $8,535
Note: To arrive at capital expenditures you add depreciation to the change in net FA, so Capital expenditures = $3,000 + $,4,000 = $7,000
- Arlington's 2016 statement of stockholders' equity:
|
Common Stock |
Retained |
Total Stockholders' |
||
|
Shares |
Amont |
Earnings |
Equity |
|
|
Balances, 12/31/15 |
million |
$ million |
$ million |
$ million |
|
2016 Net Income |
4,000 |
60,000 |
40,130 |
78,500 |
|
Cash Dividends |
-8,365 |
|||
|
Addition to retained earnings |
8,365 |
8,365 |
||
|
Balances, 12/31/16 |
4,000 |
60,000 |
31,765 |
86,865 |
- Arlington's 2016 EVA : EVA= Earning before interest and tax(1-tax rate)-(total invest capital* 10%)
Total Invested Capital: 38,000 + 63,765
EVA = (38,000(1-0.4) – (101,765 *10%)
= 22,800 – 10,176.5
= 12,623.5
- Arlington's MVA at year-end 2016: 25* outstanding shares- total common equity
= 25*4000-86220
= 100,000-86,220
= 13,780
jeff jeffy answered 1 year agoRelated Solutions
FREE CASH FLOW Arlington Corporation's financial statements (dollars and shares are in millions) are provided here....
FREE CASH FLOW
Arlington Corporation's financial statements (dollars and shares
are in millions) are provided here.
Balance Sheets as of December
31
2016
2015
Assets
Cash and equivalents
$ 15,000
$ 13,000
Accounts receivable
30,000
25,000
Inventories
26,815
23,000
Total current assets
$ 71,815
$ 61,000
Net plant and equipment
46,000
45,000
Total assets
$117,815
$106,000
Liabilities and Equity
Accounts payable
$ 10,800
$ 9,500
Accruals
7,800
6,000
Notes payable
6,200
5,200
Total current liabilities
$ 24,800
$ 20,700
Long-term bonds
20,000
20,000...
FREE CASH FLOW Arlington Corporation's financial statements (dollars and shares are in millions) are provided here....
FREE CASH FLOW Arlington Corporation's financial statements
(dollars and shares are in millions) are provided here. Balance
Sheets as of December 31 2016 2015 Assets Cash and equivalents $
15,000 $ 14,000 Accounts receivable 35,000 30,000 Inventories
34,420 27,000 Total current assets $ 84,420 $ 71,000 Net plant and
equipment 52,000 49,000 Total assets $136,420 $120,000 Liabilities
and Equity Accounts payable $ 10,300 $ 9,000 Accruals 7,300 6,000
Notes payable 7,000 5,100 Total current liabilities $ 24,600 $
20,100 Long-term...
Arlington Corporation's financial statements (dollars and shares are in millions) are provided here. Balance Sheets as...
Arlington Corporation's financial statements (dollars and shares
are in millions) are provided here.
Balance Sheets as of December
31
2019
2018
Assets
Cash and equivalents
$ 15,000
$ 11,000
Accounts receivable
25,000
20,000
Inventories
22,945
19,000
Total current assets
$ 62,945
$ 50,000
Net plant and equipment
50,000
47,000
Total assets
$112,945
$97,000
Liabilities and Equity
Accounts payable
$ 10,600
$ 8,500
Accruals
7,900
6,000
Notes payable
6,200
5,450
Total current liabilities
$ 24,700
$ 19,950
Long-term bonds
15,000
15,000
Total liabilities
$...
Arlington Corporation's financial statements (dollars and shares are in millions) are provided here. Balance Sheets as...
Arlington Corporation's financial statements (dollars and shares
are in millions) are provided here.
Balance Sheets as of December
31
2019
2018
Assets
Cash and equivalents
$ 13,000
$ 11,000
Accounts receivable
35,000
30,000
Inventories
30,625
28,000
Total current assets
$ 78,625
$ 69,000
Net plant and equipment
51,000
46,000
Total assets
$129,625
$115,000
Liabilities and Equity
Accounts payable
$ 10,700
$ 8,000
Accruals
7,500
5,000
Notes payable
6,200
5,150
Total current liabilities
$ 24,400
$ 18,150
Long-term bonds
10,000
10,000
Total liabilities
$...
Arlington Corporation's financial statements (dollars and shares are in millions) are provided here. Balance Sheets as...
Arlington Corporation's financial statements (dollars and shares
are in millions) are provided here.
Balance Sheets as of December
31
2019
2018
Assets
Cash and equivalents
$ 13,000
$ 11,000
Accounts receivable
25,000
20,000
Inventories
24,685
17,000
Total current assets
$ 62,685
$ 48,000
Net plant and equipment
49,000
47,000
Total assets
$111,685
$95,000
Liabilities and Equity
Accounts payable
$ 10,500
$ 9,500
Accruals
7,600
5,000
Notes payable
6,900
5,450
Total current liabilities
$ 25,000
$ 19,950
Long-term bonds
15,000
15,000
Total liabilities
$...
Arlington Corporation's financial statements (dollars and shares are in millions) are provided here. Balance Sheets as...
Arlington Corporation's financial statements (dollars and shares
are in millions) are provided here.
Balance Sheets as of December
31
2018
2017
Assets
Cash and equivalents
$ 13,000
$ 12,000
Accounts receivable
30,000
25,000
Inventories
27,115
24,000
Total current assets
$ 70,115
$ 61,000
Net plant and equipment
52,000
48,000
Total assets
$122,115
$109,000
Liabilities and Equity
Accounts payable
$ 10,400
$ 9,000
Accruals
8,000
7,000
Notes payable
6,900
5,450
Total current liabilities
$ 25,300
$ 21,450
Long-term bonds
10,000
10,000
Total liabilities
$...
Arlington Corporation's financial statements (dollars and shares are in millions) are provided here. Balance Sheets as...
Arlington Corporation's financial statements (dollars and shares
are in millions) are provided here.
Balance Sheets as of December
31
2019
2018
Assets
Cash and equivalents
$ 13,000
$ 11,000
Accounts receivable
35,000
25,000
Inventories
33,205
24,000
Total current assets
$ 81,205
$ 60,000
Net plant and equipment
54,000
49,000
Total assets
$135,205
$109,000
Liabilities and Equity
Accounts payable
$ 10,100
$ 8,000
Accruals
7,200
7,000
Notes payable
6,600
5,250
Total current liabilities
$ 23,900
$ 20,250
Long-term bonds
15,000
15,000
Total liabilities
$...
Arlington Corporation's financial statements (dollars and shares are in millions) are provided here. Balance Sheets as...
Arlington Corporation's financial statements (dollars and shares
are in millions) are provided here.
Balance Sheets as of December
31
2019
2018
Assets
Cash and equivalents
$ 13,000
$ 12,000
Accounts receivable
30,000
20,000
Inventories
28,650
18,000
Total current assets
$ 71,650
$ 50,000
Net plant and equipment
49,000
45,000
Total assets
$120,650
$95,000
Liabilities and Equity
Accounts payable
$ 10,700
$ 8,500
Accruals
7,700
7,000
Notes payable
6,700
5,050
Total current liabilities
$ 25,100
$ 20,550
Long-term bonds
20,000
20,000
Total liabilities
$...
Arlington Corporation's financial statements (dollars and shares are in millions) are provided here. Balance Sheets as...
Arlington Corporation's financial statements (dollars and shares
are in millions) are provided here.
Balance Sheets as of December
31
2016
2015
Assets
Cash and equivalents
$ 14,000
$ 13,000
Accounts receivable
35,000
30,000
Inventories
34,660
27,000
Total current assets
$ 83,660
$ 70,000
Net plant and equipment
50,000
49,000
Total assets
$133,660
$119,000
Liabilities and Equity
Accounts payable
$ 10,700
$ 9,000
Accruals
7,100
5,000
Notes payable
6,200
5,400
Total current liabilities
$ 24,000
$ 19,400
Long-term bonds
20,000
20,000
Total liabilities
$...
Arlington Corporation's financial statements (dollars and shares are in millions) are provided here. Balance Sheets as...
Arlington Corporation's financial statements (dollars and shares
are in millions) are provided here. Balance Sheets as of December
31 2016 2015 Assets Cash and equivalents $ 13,000 $ 11,000 Accounts
receivable 35,000 30,000 Inventories 32,880 28,000 Total current
assets $ 80,880 $ 69,000 Net plant and equipment 51,000 48,000
Total assets $131,880 $117,000 Liabilities and Equity Accounts
payable $ 10,600 $ 8,000 Accruals 7,200 6,000 Notes payable 6,200
5,400 Total current liabilities $ 24,000 $ 19,400 Long-term bonds
15,000 15,000...
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