Arlington Corporation's financial statements (dollars and shares are in millions) are provided here. Balance Sheets as of December 31 2021 2020 Assets Cash and equivalents $ 15,000 $ 14,000 Accounts receivable 30,000 20,000 Inventories 28,355 16,000 Total current assets $ 73,355 $ 50,000 Net plant and equipment 47,000 45,000 Total assets $120,355 $95,000 Liabilities and Equity Accounts payable $ 10,900 $ 8,500 Accruals 7,100 7,000 Notes payable 6,200 5,500 Total current liabilities $ 24,200 $ 21,000 Long-term bonds 20,000 20,000 Total liabilities $ 44,200 $ 41,000 Common stock (4,000 shares) 50,000 50,000 Retained earnings 26,155 4,000 Common equity $ 76,155 $ 54,000 Total liabilities and equity $120,355 $95,000 Income Statement for Year Ending December 31, 2021 Sales $242,000 Operating costs excluding depreciation and amortization 190,000 EBITDA $ 52,000 Depreciation & amortization 8,000 EBIT $ 44,000 Interest 6,650 EBT $ 37,350 Taxes (25%) 9,337.50 Net income $28,012.50 Dividends paid $5,857.50 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. What was net operating working capital for 2020 and 2021? Assume that all cash is excess cash; i.e., this cash is not needed for operating purposes. 2020 $ million 2021 $ million What was Arlington's 2021 free cash flow? $ million Construct Arlington's 2021 statement of stockholders' equity. Statement of Stockholders' Equity, 2021 Common Stock Retained Earnings Total Stockholders' Equity Shares Amount Balances, 12/31/20 million $ million $ million $ million 2021 Net Income million Cash Dividends million Addition to retained earnings million Balances, 12/31/21 million $ million $ million $ million What was Arlington's 2021 EVA? Assume that its after-tax cost of capital is 10%. Round your answer to the nearest cent. $ million What was Arlington's MVA at year-end 2021? Assume that its stock price at December 31, 2021 was $25. Round your answer to the nearest cent. $ million
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
Arlington Corporation's financial statements (dollars and shares are in millions) are provided here.
| Balance Sheets as of December 31 | |||
| 2021 | 2020 | ||
| Assets | |||
| Cash and equivalents | $ 15,000 | $ 14,000 | |
| 30,000 | 20,000 | ||
| Inventories | 28,355 | 16,000 | |
| Total current assets | $ 73,355 | $ 50,000 | |
| Net plant and equipment | 47,000 | 45,000 | |
| Total assets | $120,355 | $95,000 | |
| Liabilities and Equity | |||
| Accounts payable | $ 10,900 | $ 8,500 | |
| Accruals | 7,100 | 7,000 | |
| Notes payable | 6,200 | 5,500 | |
| Total current liabilities | $ 24,200 | $ 21,000 | |
| Long-term bonds | 20,000 | 20,000 | |
| Total liabilities | $ 44,200 | $ 41,000 | |
| Common stock (4,000 shares) | 50,000 | 50,000 | |
| 26,155 | 4,000 | ||
| Common equity | $ 76,155 | $ 54,000 | |
| Total liabilities and equity | $120,355 | $95,000 |
| Income Statement for Year Ending December 31, 2021 | |
| Sales | $242,000 |
| Operating costs excluding |
190,000 |
| EBITDA | $ 52,000 |
| Depreciation & amortization | 8,000 |
| EBIT | $ 44,000 |
| Interest | 6,650 |
| EBT | $ 37,350 |
| Taxes (25%) | 9,337.50 |
| Net income | $28,012.50 |
| Dividends paid | $5,857.50 |
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.
-
What was net operating
working capital for 2020 and 2021? Assume that all cash is excess cash; i.e., this cash is not needed for operating purposes.2020 $ million 2021 $ million -
What was Arlington's 2021
free cash flow ?$ million
-
Construct Arlington's 2021 statement of
stockholders' equity .Statement of Stockholders' Equity, 2021 Common Stock Retained
EarningsTotal Stockholders'
EquityShares Amount Balances, 12/31/20 million $ million $ million $ million 2021 Net Income million Cash Dividends million Addition to retained earnings million Balances, 12/31/21 million $ million $ million $ million -
What was Arlington's 2021 EVA? Assume that its after-tax cost of capital is 10%. Round your answer to the nearest cent.
$ million
-
What was Arlington's MVA at year-end 2021? Assume that its stock price at December 31, 2021 was $25. Round your answer to the nearest cent.
$ million
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