Laiho Industries's 2017 and 2018 bal- .---n DIAIEMILI, ance sheets (in thousands of dollars) are shown. 2018 2017 Cash $102,850 $ 89,725 Accounts receivable 103,365 85,527 Inventories 38,444 34,982 Total current assets $244,659 $210,234 Net fixed assets 67,165 42,436 $252,670 Total assets $311,824 Accounts payable $ 30,761 $ 23,109 Accruals 30,477 22,656 Notes payable 16,717 14,217 $ 59,982 $ 77,955 76,264 $154219 Total current liabilities Long-term debt 63,914 $123,896 Total liabilities Common stock 100,000 90,000 Retained earmings 57,605 $157,605 38,774 Total common equity Total liabilities and equity $128,774 $311,824 $252,670
a. Sales for 2018 were $455,150,000, and EBITDA was 15% of sales. Furthermore, depreciation
and amortization were 11% of net fixed assets, interest was $8,575,000, the
corporate tax rate was 40%, and Laiho pays 40% of its net income as dividends. Given
this information, construct the firm’s 2018 income statement.
b. Construct the statement of
and the 2018 statement of cash flows.
c. Calculate 2017 and 2018 net operating
flow (FCF). Assume the firm has no excess cash.
d. If Laiho increased its dividend payout ratio, what effect would this have on corporate
taxes paid? What effect would this have on taxes paid by the company’s shareholders?
e. Assume that the firm’s after-tax cost of capital is 10.5%. What is the firm’s 2018 EVA?
f. Assume that the firm’s stock price is $22 per share and that at year-end 2018 the firm
has 10 million shares outstanding. What is the firm’s MVA at year-end 2018?
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