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In: Accounting

Please use financial statement information for Fin 602 Corp below for question 1) to 6). Income...

Please use financial statement information for Fin 602 Corp below for question 1) to 6).

Income statement (million dollars)

2019

2018

Sales

2400

1000

Operating costs excluding depreciation

2000

850

Depreciation

270

25

Earnings before interest and taxes

130

125

Less interest

110

20.2

Earnings before tax

20

104.8

Tax (21%)

4.2

22

Net Income available to common stockholders

15.8

82.8

Common dividend

4.0

4.4

Balance sheet (million dollars)

2019

2018

Cash and equivalents

12

10

Short term investments

23

20

Account receivable

350

150

Inventories

300

200

Total current assets

685

380

Net plant and equipment

2173.5

250

Total assets

2858.5

630

Accounts payable

108

90

Notes payable

90

71.5

Accruals

72

60

Total current liabilities

270

221.5

Long term debts

2330

150

Total liabilities

2600

371.5

Common stock (50 million shares)

50

50

Retained earnings

208.5

208.5

Common equity

258.5

258.5

Total liabilities and equity

2858.5

630

  1. Calculate NOPAT (net operating profit after tax) of the year 2019 and 2018
  1. Calculate the amount of total (net) operating capital for both year – 2019 and 2018
  1. Calculate the free cash flow for the year of 2019
  1. Calculate ROIC (Return on capital invested) and CR (Capital requirement ratio) for 2019 and 2018.  Then interpret those ratios
  1. Basing on answers in 1) to 4), does Fin 602 look good in 2019? If not good, what looks like happening in operation and finance?
  1. Any suggestion to improve free cash flow or performance of Fin 602 Corp

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