EXAM PROBLEMS

General Accounting

You are considering an investment in Fields and Struthers, Incorporated, and want to evaluate the firm's free cash flow. From the income statement, you see that Fields and Struthers earned an EBIT of $90 million, had a tax rate of 21 percent, and its depreciation expense was $10 million. Fields and Struthers's gross fixed assets increased by $56 million from last year to this year. The firm's current assets increased by $44 million and spontaneous current liabilities increased by $36 million.Calculate Fields and Struthers's NOPAT

A company has a five year weighted average after tax cash flow of $125,000. It has been determined the discount rate is 19%, short term expected growth is 11%, and long-term sustainable growth is 3%. The analyst has also determined excess cash of $25,000. What is the value of the company based on the capitalization of after tax cash flows? a. $625,000 b. $657,895 c. $781,250 d. $909,090

4. Last year Rattner Robotics had $5 million in operating income (EBIT). Its depreciationexpense was $1 million, its interest expense was $1 million, and its corporate tax rate was40%. At year-end, it had $14 million in current assets, $3 million in accounts payable, $1million in accruals, and $15 million in net plant and equipment. Assume that Rattner’s onlynoncash item was depreciation. a. What was the company’s net income?b. What was its net working capital (NWC)?c. Rattner had $12 million in net plant and equipment the prior year. Its net workingcapital has remained constant over time. What is the company’s free cash flow (FCF) forthe year that just ended?d. If the firm had $4.5 million in retained earnings at the beginning of the year and paidout total dividends of $1.2 million, what was its retained earnings at the end of the year?Assume that all dividends declared were actually paid.

ok You are considering an investment in Fields and Struthers, Incorporated, and want to evaluate the firm's free cash flow From the income statement, you see that Fields and Struthers earned an EBIT of $66 million, had a tax rate of 21 percent, and its depreciation expense was $5 million. Fields and Struthers's gross fixed assets increased by $32 million from last year to this year. The firm's current assets increased by $28 million and spontaneous current liabilities increased by $16 million. Calculate Fields and Struthers's NOPAT Note: Enter your answer in millions of dollars rounded to 2 decimal places. (i.e., Enter 5,500,000 as 5.50.) NOPAT Calculate Fields and Struthers's operating cash flow Note: Enter your answer in millions of dollars rounded to 2 decimal places. (i.e., Enter 5,500,000 as 5.50.) Operating cash flow Investment in operating capital million Calculate Fields and Struthers's investment in operating capital. Note: Enter your answer in millions of dollars. (i.e.,…

Calculate Computron’s return on invested capital (ROIC). Computron has a 10% cost of capital (WACC). What caused the decline in the ROIC? Was it due to operating profitability or capital utilization? Do you think Computron’s growth added value? What is Computron's EVA?  The cost of capital was 10% in both years. Assume that a corporation has $200,000 of taxable income from operations. What is the company's federal tax liability? Assume that you are in the 25% marginal tax bracket and that you have $50,000 to invest. You have narrowed your investment choices down to municipal bonds yielding 7% or equally risky corporate bonds with a yield of 10%. Which one should you choose and why? At what marginal tax rate would you be indifferent?

A firm has EBIT of $275 million, which is net of $52 million in depreciation. In addition, the firm had $81 million in capital expenditures and an increase in net working capital of $5 million. The firm's tax rate is 21 percent. The firm's FCF is closest (in millions) to:

Free Inc. has after tax operating income of $100 million. It is depreciation is $20million. The capital expenditure is $50million. Its NWC increase for $30 million, the excess cash increases for $5 million, and note payable decreases $1 million. What is the firm's free cash flow during the fiscal year in consideration (in million)? a)45 b)44 c)46 d)48

A company recently reported operating income of $500.0 million, depreciation of $50.0 million, and had a tax rate of 21%. The firm's expenditures on fixed assets and net operating working capital totaled $10.0 million. How much was its free cash flow, in millions? O $435.00 O $455.00 O $335.00

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Last year, Xxx Yyyyy had $5 million in Operating Income (EBIT). The company had a Net Depreciation Expense of $1 million and an Interest Expense of $1 million; its Corporate Tax Rate was 40%. The company has $14 million in Operating Current Assets and $4 million in Operating Current Liabilities; it has $15 million in Net Plant and Equipment. It estimates that it has an After-Tax Cost of Capital of 10%. Assume that Xxx’s only non-Cash item was Depreciation. A.) Calculate Net Operating Working Capital for the current year. B.) Calculate Total Net Operating Capital for the Current Year. C.) If Total Net Operating Capital in the Previous Year was $24 million, what was the company’s Free Cash Flow (FCF) for the year?

Last year Rattner Robotics had $5 million in operatingincome (EBIT). Its depreciation expense was $1 million, its interest expense was $1 million,and its corporate tax rate was 40%. At year-end, it had $14 million in operating currentassets, $3 million in accounts payable, $1 million in accruals, $2 million in notes payable,and $15 million in net plant and equipment. Assume Rattner has no excess cash. Rattneruses only debt and common equity to fund its operations. (In other words, Rattner has nopreferred stock on its balance sheet.) Rattner had no other current liabilities. Assume thatRattner’s only noncash item was depreciation.a. What was the company’s net income?b. What was its net operating working capital (NOWC)?c. What was its net working capital (NWC)?d. Rattner had $12 million in net plant and equipment the prior year. Its net operatingworking capital has remained constant over time. What is the company’s free cashflow (FCF) for the year that just ended?e. Rattner has 500,000…