You are an investment analyst at FI Investments tasked to value FBC firm a Southern Agricultural Conglomerate. The following financial information was recently released for FBC. The company’s 2018 and 2017 annual financial reports are contained in tables 1 and 2 below, along with important additional information: Table 1: FBC statement of financial position (R millions) 2018 2017 Cash and equivalents R149 R83 Accounts receivable 295 265 Inventory 275 285 Total current assets R719 R633 Total fixed assets 3 909 3 856 Accounts payable 228 220 Notes payable 0 0 Total current liabilities 228 220 Long term debt 1 800 1 650 Total liabilities and shareholders equity 3 909 3 856 Number of shares outstanding (millions) 100 100 Additional information: Depreciation (2018): R483. The firm spent R250m in profitable projects during the course of 2018 WACC : 15% Cost of equity of the firm: 10% Tax rate : 40% Table 2: FBC statement of comprehensive income (R millions except for share data) 2018 2017 Total revenues R3 175 R3 075 EBIT 495 448 Interest expense 104 101 Net Income 235 208 Dividends per share R0.80 R0.80 Use the information given, to answer the following: Calculate the Net Working Capital for 2017 the Net Working Capital for 2018

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Please help, this is an example out of our textbook that needs to be done in preperation for our test later this week. Due to online learning I have fallen behind and don't know what steps to follow or what formulas to use.

You are an investment analyst at FI Investments tasked to value FBC firm a Southern Agricultural Conglomerate. The following financial information was recently released for FBC. The company’s 2018 and 2017 annual financial reports are contained in tables 1 and 2 below, along with important additional information:

Table 1: FBC statement of financial position (R millions)

	2018	2017
Cash and equivalents	R149	R83
Accounts receivable	295	265
Inventory	275	285
Total current assets	R719	R633

Total fixed assets	3 909	3 856

Accounts payable	228	220
Notes payable	0	0
Total current liabilities	228	220

Long term debt	1 800	1 650

Total liabilities and shareholders equity	3 909	3 856
Number of shares outstanding (millions)	100	100

Additional information:

Depreciation (2018): R483.
The firm spent R250m in profitable projects during the course of 2018
WACC : 15%
Cost of equity of the firm: 10%
Tax rate : 40%

Table 2: FBC statement of comprehensive income

(R millions except for share data)

	2018	2017
Total revenues	R3 175	R3 075
EBIT	495	448
Interest expense	104	101
Net Income	235	208
Dividends per share	R0.80	R0.80

Use the information given, to answer the following:

Calculate

the Net Working Capital for 2017
the Net Working Capital for 2018

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