Question

In: Finance

Quantitative Problem: Rosnan Industries' 2013 and 2012 balance sheets and income statements are shown below. Balance...

Quantitative Problem: Rosnan Industries' 2013 and 2012 balance sheets and income statements are shown below.

Balance Sheets:
2013 2012
Cash and equivalents $100   $85  
Accounts receivable 275   200  
Inventories 375   250  
      Total current assets $750   $635  
Net plant and equipment 2,000   1,490  
Total assets $2,750   $2,125  
Accounts payable $150   $85  
Accruals 75   50  
Notes payable 150   75  
      Total current liabilities $375   $210  
Long-term debt 450   290  
Common stock 1,225   1,225  
Retained earnings 700   400  
Total liabilities and equity $2,750   $2,125  


Income Statements:
2013 2012
Sales $2,000   $1,500  
Operating costs excluding depreciation 1,250   1,000  
EBITDA $750   $500  
Depreciation and amortization 100   75  
EBIT $650   $425  
Interest 62   45  
EBT $588   $380  
Taxes (40%) 235   152  
Net income $353   $228  
Dividends paid $53   $48  
Addition to retained earnings $300   $180  
Shares outstanding 170    170   
Price $ 27.78    $ 25.28   
WACC 9.00 %  

Using the financial statements above, what is Rosnan's 2013 market value added (MVA)? Round your answer to the nearest dollar. Do not round intermediate calculations.

=???

Using the financial statements given earlier, what is Rosnan's 2013 economic value added (EVA)? Round your answer to the nearest cent. Do not round intermediate calculations.

=???

Solutions

Expert Solution

I) 2013 : Market value added (MVA) = Market value of stock - Book value of equity & retained earnings

Here, i) Market value of stock = Shares outstanding * Market price of stock

Market value of stock = 170 shares * $27.78 per share

Market value of stock = $4,722.60

ii) Book value of stock = $1,225

Book value of retained earnings = $700

Now,

Market value added (MVA) = $4,722.60 - ($1,225 + $700)

Market value added (MVA) = $2,797.60

II) 2013 : Economic value added (EVA) = Net operating profit after tax - (Capital invested * WACC)

Here,

i) Net operating profit after tax (NOPAT) = Net income + Interest * (1 - Tax rate)

Tax rate = 40% or 0.40

NOPAT = $353 + $62 * (1 - 0.40)

NOPAT = $353 + $37.20

NOPAT (Net operating profit after tax) = $390.20

ii) Capital invested = Long term debt + Common stock + Retained earnings

Capital invested = $450 + $1,225 + $700

Capital invested = $2,375

iii) WACC = 9% or 0.09

Now, use the formula of EVA,

Economic value added (EVA) = $390.20 - ($2,375 * 0.09)

Economic value added (EVA) = $390.20 - $213.75

Economic value added (EVA) = $176.45

jeff jeffy answered 1 year ago
Next > < Previous

Related Solutions

Quantitative Problem: Rosnan Industries' 2013 and 2012 balance sheets and income statements are shown below. Balance...
Quantitative Problem: Rosnan Industries' 2013 and 2012 balance sheets and income statements are shown below. Balance Sheets: 2013 2012 Cash and equivalents $100   $85   Accounts receivable 275   300   Inventories 375   250         Total current assets $750   $635   Net plant and equipment 2,300   1,490   Total assets $3,050   $2,125   Accounts payable $150   $85   Accruals 75   50   Notes payable 150   75         Total current liabilities $375   $210   Long-term debt 450   290   Common stock 1,225   1,225   Retained earnings 1,000   400   Total liabilities and equity $3,050   $2,125  ...
Quantitative Problem: Rosnan Industries' 2013 and 2012 balance sheets and income statements are shown below. Balance...
Quantitative Problem: Rosnan Industries' 2013 and 2012 balance sheets and income statements are shown below. Balance Sheets: 2013 2012 Cash and equivalents $100   $85   Accounts receivable 275   200   Inventories 375   250         Total current assets $750   $635   Net plant and equipment 2,000   1,490   Total assets $2,750   $2,125   Accounts payable $150   $85   Accruals 75   50   Notes payable 150   75         Total current liabilities $375   $210   Long-term debt 450   290   Common stock 1,225   1,225   Retained earnings 700   400   Total liabilities and equity $2,750   $2,125  ...
3. Quantitative Problem: Rosnan Industries' 2013 and 2012 balance sheets and income statements are shown below....
3. Quantitative Problem: Rosnan Industries' 2013 and 2012 balance sheets and income statements are shown below. Balance Sheets: 2013 2012 Cash and equivalents $100   $85   Accounts receivable 275   200   Inventories 375   250         Total current assets $750   $635   Net plant and equipment 2,000   1,490   Total assets $2,750   $2,125   Accounts payable $150   $85   Accruals 75   50   Notes payable 150   75         Total current liabilities $375   $210   Long-term debt 450   290   Common stock 1,225   1,225   Retained earnings 700   400   Total liabilities and equity $2,750  ...
Rosnan Industries' 2013 and 2012 balance sheets and income statements are shown below. Balance Sheets: 2013...
Rosnan Industries' 2013 and 2012 balance sheets and income statements are shown below. Balance Sheets: 2013 2012 Cash and equivalents $100   $85   Accounts receivable 275   300   Inventories 375   250         Total current assets $750   $635   Net plant and equipment 2,300   1,490   Total assets $3,050   $2,125   Accounts payable $150   $85   Accruals 75   50   Notes payable 150   75         Total current liabilities $375   $210   Long-term debt 450   290   Common stock 1,225   1,225   Retained earnings 1,000   400   Total liabilities and equity $3,050   $2,125   Income Statements:...
Quantitative Problem: Rosnan Industries' 2014 and 2013 balance sheets and income statements are shown below. Balance...
Quantitative Problem: Rosnan Industries' 2014 and 2013 balance sheets and income statements are shown below. Balance Sheets: 2014 2013 Cash and equivalents $80   $65   Accounts receivable 275   300   Inventories 375   350         Total current assets $730   $715   Net plant and equipment 2,000   1,490   Total assets $2,730   $2,205   Accounts payable $150   $85   Accruals 75   50   Notes payable 130   155         Total current liabilities $355   $290   Long-term debt 450   290   Common stock 1,225   1,225   Retained earnings 700   400   Total liabilities and equity $2,730   $2,205  ...
Quantitative Problem: Rosnan Industries' 2014 and 2013 balance sheets and income statements are shown below. Balance...
Quantitative Problem: Rosnan Industries' 2014 and 2013 balance sheets and income statements are shown below. Balance Sheets: 2014 2013 Cash and equivalents $70   $55   Accounts receivable 275   300   Inventories 375   350         Total current assets $720   $705   Net plant and equipment 2,000   1,490   Total assets $2,720   $2,195   Accounts payable $150   $85   Accruals 75   50   Notes payable 120   145         Total current liabilities $345   $280   Long-term debt 450   290   Common stock 1,225   1,225   Retained earnings 700   400   Total liabilities and equity $2,720   $2,195  ...
Quantitative Problem: Rosnan Industries' 2019 and 2018 balance sheets and income statements are shown below. Balance...
Quantitative Problem: Rosnan Industries' 2019 and 2018 balance sheets and income statements are shown below. Balance Sheets 2019 2018 Assets Cash and equivalents $80   $65   Accounts receivable 275   300   Inventories 375   250         Total current assets $730   $615   Net plant and equipment 2,300   1,490   Total assets $3,030   $2,105   Liabilities and Equity Accounts payable $150   $85   Accruals 75   50   Notes payable 130   55         Total current liabilities $355   $190   Long-term debt 450   290   Common stock 1,225   1,225   Retained earnings 1,000   400   Total liabilities...
Quantitative Problem: Rosnan Industries' 2019 and 2018 balance sheets and income statements are shown below. Balance...
Quantitative Problem: Rosnan Industries' 2019 and 2018 balance sheets and income statements are shown below. Balance Sheets Assets 2019 2018 Cash and equivalents $100   $85   Accounts receivable 275   300   Inventories 375   250         Total current assets $750   $635   Net plant and equipment 2,300   1,490   Total assets $3,050   $2,125   Liabilities and Equity Accounts payable $150   $85   Accruals 75   50   Notes payable 150   75         Total current liabilities $375   $210   Long-term debt 450   290         Total liabilities 825   500   Common stock 1,225   1,225   Retained earnings...
Quantitative Problem: Rosnan Industries' 2018 and 2017 balance sheets and income statements are shown below. Balance...
Quantitative Problem: Rosnan Industries' 2018 and 2017 balance sheets and income statements are shown below. Balance Sheets: 2018 2017   Assets Cash and equivalents $100   $85   Accounts receivable 275   300   Inventories 375   350       Total current assets $750   $735   Net plant and equipment 2,000   1,490   Total assets $2,750   $2,225     Liabilities and Equity Accounts payable $150   $85   Accruals 75   50   Notes payable 150   175       Total current liabilities $375   $310   Long-term debt 450   290       Total liabilities $825   $600   Common stock 1,225   1,225   Retained earnings...
Quantitative Problem: Rosnan Industries' 2019 and 2018 balance sheets and income statements are shown below. Balance...
Quantitative Problem: Rosnan Industries' 2019 and 2018 balance sheets and income statements are shown below. Balance Sheets: 2019 2018 Cash and equivalents $ 60 $ 45 Accounts receivable 275 300 Inventories 375 350       Total current assets $ 710 $ 695 Net plant and equipment 2,000 1,490 Total assets $ 2,710 $ 2,185 Accounts payable $ 150 $ 85 Accruals 75 50 Notes payable 110 135 Total current liabilities $ 335 $ 270 Long-term debt 450 290 Common stock 1,225 1,225...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT