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14.  Problem 3.14 (Free Cash Flow) eBook Arlington Corporation's financial statements (dollars and shares are in millions)...

14.  Problem 3.14 (Free Cash Flow)

eBook

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 35,000 30,000
Inventories 34,115 29,000
  Total current assets $ 84,115 $ 70,000
Net plant and equipment 50,000 46,000
Total assets $134,115 $116,000
Liabilities and Equity
Accounts payable $ 10,100 $  8,500
Accruals 7,500 7,000
Notes payable 6,600 5,000
  Total current liabilities $ 24,200 $ 20,500
Long-term bonds 15,000 15,000
  Total liabilities $ 39,200 $ 35,500
Common stock (4,000 shares) 50,000 50,000
Retained earnings 44,915 30,500
  Common equity $ 94,915 $ 80,500
Total liabilities and equity $134,115 $116,000
Income Statement for Year Ending December 31, 2019
Sales $237,000
Operating costs excluding depreciation and amortization 190,000
EBITDA $ 47,000
Depreciation & amortization 5,000
EBIT $ 42,000
Interest 4,500
EBT $ 37,500
Taxes (25%) 9,375.00
Net income $ 28,125.00
Dividends paid 13,710.00

Enter your answers in millions. For example, an answer of $25,000,000,000 should be entered as 25,000. Round your answers to the nearest whole number, if necessary.

  1. What was net operating working capital for 2018 and 2019? Assume that all cash is excess cash; i.e., this cash is not needed for operating purposes.

    2018 $    million
    2019 $    million

  2. What was Arlington's 2019 free cash flow?

    $    million

  3. Construct Arlington's 2019 statement of stockholders' equity.

    Statement of Stockholders' Equity, 2019
    Common Stock Retained
    Earnings    		 Total Stockholders'
    Equity
    Shares Amount
    Balances, 12/31/18   million $    million $    million $    million
    2019 Net Income   million
    Cash Dividends   million
    Addition to retained earnings   million
    Balances, 12/31/19   million $    million $    million $    million

  4. What was Arlington's 2019 EVA? Assume that its after-tax cost of capital is 10%. Round your answer to the nearest cent.

    $    million

  5. What was Arlington's MVA at year-end 2019? Assume that its stock price at December 31, 2019 was $25. Round your answer to the nearest cent.

    $    million

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Expert Solution

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

jeff jeffy answered 2 years ago
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