Question

Need to do this using excel formulas Note: there are 4 worksheets - one for each problem
ST-2 NET INCOME AND CASH FLOW
Last year Rattner Robotics had the following financials (in $ millions):
Operating income (EBIT)		$5
Depreciation		1
Interest		1
Tax rate		40%
Current assets (year end)		14
Accounts payable		3
Accruals		1
Net plant and equipment		15
Depreciation is only non cash item
		$ millions
a. What was the company's net income?
	EBIT
	Interest
	EBT
	Taxes
	Net Income
b. What was its net operating working capital (NOWC)?
	Current assets
	Payables
	Accruals
	NOWC
d. Plant and equipment - prior year		12
NOWC has remained constant over time.
What is the company's free cash flow (FCF) for the year that just ended?
Free Cash Flow
FCF =	EBIT (1 - T)	+	Depr.	-	Capital expenditures	-
FCF =
FCF =
e. Rattner has 500,000 common shares outstanding and the common stock amount on the
balance sheet is $5 million. The company has not issued or repurchased common stock
during the year. Last year's balance in retained earnings was $11.2 million and the firm
paid out dividends of $1.2 million during the year. Develop Rattner's end-of-the-year
Statement of Stockholder's Equity.
	Common Stock
	Shares	Amount	Retained Earnings		Total Stockholders' Equity
Balances, beginning of year
Net income
Cash dividends
Addition to retained earnings
Balances, end of year

Answer 1

A

What was the company's net income?

EBIT	5
Interest	1
EBT	4
Taxes	1.6
Net Income	2.4

_____________________________________________

B

What was its net operating working capital (NOWC)?

NOWC = Current assets-Payable- accruals

Current assets	14
Less:
Payables	-3
Accruals	-1
NOWC	10

NOWC=10

__________________________________

D

Free Cash Flow
FCF =	EBIT (1 - T)	+	Depr.	-	Capital expenditures
FCF =	3	+	1	-	4
FCF =	0

FCF=0

_____________________________________

E
  Statement of Stockholder's Equity.

	Common Stock
	Shares	Amount	Retained Earnings	=	Total Stockholders' Equity
Balances, beginning of year	0.5	5	11.2		16.2
Net income			2.4		2.4
Cash dividends			-1.2		-1.2
Addition to retained earnings
Balances, end of year	0.5	5	12.4		17.4