Given data: Sales $2,000.000 OpCap $1,120,000 Wacc 9% OP = Nopat/sales 4.5% CR = OpCap/sales 56% Year Rate growth (%) Sales Nopat OpCap Free Cash Flow (FCF) Free Cash Flow - Growth ROIC 0 - $2,000.000 $90.000 $1,120.000 - - - 1 0.10 $2,200.000 $99.000 $1,232.000 $(13.000) - 8.04% 2 0.08 $2,376.000 $106.920 $1,330.560 $8.360 -164.31% 8.04% 3 0.05 $2,494.800 $112.266 $1,397.088 $45.738 447.11% 8.04% 4 0.05 $2,619.540 $117.879 $1,466.942 $48.025 5.00% 8.04% Assume growth rates are at their original levels. What is the impact of simultaneous improvements in operating profitability and capital requirements, the impact of simultaneous improvements in the growth rates, operating profitability, and capital requirements?
Given data: Sales $2,000.000 OpCap $1,120,000 Wacc 9% OP = Nopat/sales 4.5% CR = OpCap/sales 56% Year Rate growth (%) Sales Nopat OpCap Free Cash Flow (FCF) Free Cash Flow - Growth ROIC 0 - $2,000.000 $90.000 $1,120.000 - - - 1 0.10 $2,200.000 $99.000 $1,232.000 $(13.000) - 8.04% 2 0.08 $2,376.000 $106.920 $1,330.560 $8.360 -164.31% 8.04% 3 0.05 $2,494.800 $112.266 $1,397.088 $45.738 447.11% 8.04% 4 0.05 $2,619.540 $117.879 $1,466.942 $48.025 5.00% 8.04% Assume growth rates are at their original levels. What is the impact of simultaneous improvements in operating profitability and capital requirements, the impact of simultaneous improvements in the growth rates, operating profitability, and capital requirements?
Survey of Accounting (Accounting I)
8th Edition
ISBN:9781305961883
Author:Carl Warren
Publisher:Carl Warren
Chapter15: Capital Investment Analysis
Section: Chapter Questions
Problem 15.1.1MBA
Related questions
Question
| Given data: | |||||||
| Sales | $2,000.000 | ||||||
| OpCap | $1,120,000 | ||||||
| Wacc | 9% | ||||||
| OP = |
4.5% | ||||||
| CR = OpCap/sales | 56% | ||||||
| Year | Rate growth (%) | Sales | Nopat | OpCap | Free Cash Flow - Growth | ROIC | |
| 0 | - | $2,000.000 | $90.000 | $1,120.000 | - | - | - |
| 1 | 0.10 | $2,200.000 | $99.000 | $1,232.000 | $(13.000) | - | 8.04% |
| 2 | 0.08 | $2,376.000 | $106.920 | $1,330.560 | $8.360 | -164.31% | 8.04% |
| 3 | 0.05 | $2,494.800 | $112.266 | $1,397.088 | $45.738 | 447.11% | 8.04% |
| 4 | 0.05 | $2,619.540 | $117.879 | $1,466.942 | $48.025 | 5.00% | 8.04% |
Assume growth rates are at their original levels. What is the impact of simultaneous improvements in operating profitability and capital requirements, the impact of simultaneous improvements in the growth rates, operating profitability, and capital requirements?
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