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4:36 am & G NET INCOME &... 目 NET INCOME AND CASH FLOW Last year Rattner Robotics had $5 million in operating income (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 current assets, $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. Rattner uses only debt and common equity to fund its operations. (In other words, Rattner has no preferred stock on its balance sheet.) Rattner had no other current liabilities. Assume that Rattner'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 operating working capital has remained constant over time. What is the company's free cash flow (FCF) for the year that just ended? 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- year statement of stockholders' equity. f. If the firm's stock price at year-end is $52, what is the firm's market value added (MVA)? g. If the firm's after-tax percentage cost of capital is 9%, what is the firm's EVA at year-end? = | | || ០ 20 D

4:36 am & G NET INCOME &... 目 NET INCOME AND CASH FLOW Last year Rattner Robotics had $5 million in operating income (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 current assets, $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. Rattner uses only debt and common equity to fund its operations. (In other words, Rattner has no preferred stock on its balance sheet.) Rattner had no other current liabilities. Assume that Rattner'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 operating working capital has remained constant over time. What is the company's free cash flow (FCF) for the year that just ended? 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- year statement of stockholders' equity. f. If the firm's stock price at year-end is $52, what is the firm's market value added (MVA)? g. If the firm's after-tax percentage cost of capital is 9%, what is the firm's EVA at year-end? = | | || ០ 20 D

Financial Management: Theory & Practice
Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter2: Financial Statements, Cash Flow,and Taxes
Section: Chapter Questions
Problem 9P: Carter Swimming Pools has $16 million in net operating profit after taxes (NOPAT) in the current...
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4:36 am & G NET INCOME &... 目 NET INCOME AND CASH FLOW Last year Rattner Robotics had $5 million in operating income (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 current assets, $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. Rattner uses only debt and common equity to fund its operations. (In other words, Rattner has no preferred stock on its balance sheet.) Rattner had no other current liabilities. Assume that Rattner'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 operating working capital has remained constant over time. What is the company's free cash flow (FCF) for the year that just ended? 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- year statement of stockholders' equity. f. If the firm's stock price at year-end is $52, what is the firm's market value added (MVA)? g. If the firm's after-tax percentage cost of capital is 9%, what is the firm's EVA at year-end? = | | || ០ 20 D
Transcribed Image Text:4:36 am & G NET INCOME &... 目 NET INCOME AND CASH FLOW Last year Rattner Robotics had $5 million in operating income (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 current assets, $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. Rattner uses only debt and common equity to fund its operations. (In other words, Rattner has no preferred stock on its balance sheet.) Rattner had no other current liabilities. Assume that Rattner'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 operating working capital has remained constant over time. What is the company's free cash flow (FCF) for the year that just ended? 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- year statement of stockholders' equity. f. If the firm's stock price at year-end is $52, what is the firm's market value added (MVA)? g. If the firm's after-tax percentage cost of capital is 9%, what is the firm's EVA at year-end? = | | || ០ 20 D
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