Cumberland Industries' most recent balance sheets (in thousands of dollars) are shown, below and in the partial

Question:

Cumberland Industries' most recent balance sheets (in thousands of dollars) are shown, below and in the partial model in the file:

image

a. The company's sales for 2015 were $455,150,000, and EBITDA was 15% of sales. Furthermore, depreciation amounted to 11% of net fixed assets, interest charges were $8,575,000, the corporate tax rate was 40%, and Cumberland pays 40% of its net income out in dividends. Given this information, construct Cumberland's 2015 income statement.?

b. Next, construct the firm's statement of shareholders equity for the year ended December 31, 2015, and the 2015 statement of cash flows.

c. Calculate net operating working capital, total net operating capital, net operating profit after taxes, and free cash flow for 2015.

d. Calculate the firm's EVA and MVA for 2015. Assume that Cumberland had 10 million Shares outstanding, that the 2015 closing stock price was $17.25 per share, and that its after-tax cost of capital (W ACC) was 12%.

e. What will be the retained earnings for year 2015 if the tax rate is 30% and the pay out ratio is 35%? Make necessary changes in the balance sheet.

Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of...
Free Cash Flow
Free cash flow (FCF) represents the cash a company generates after accounting for cash outflows to support operations and maintain its capital assets. Unlike earnings or net income, free cash flow is a measure of profitability that excludes the...
Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Financial Management Theory And Practice

ISBN: 978-0176583057

3rd Canadian Edition

Authors: Eugene Brigham, Michael Ehrhardt, Jerome Gessaroli, Richard Nason

Question Posted: