Laiho Industries" 2001 and 2002 balance sheets (in thousands of dollars) are shown below:

Financial statements, EVA, and MVA 2002 2001 Cash S102.850 S 89,725 Accounts receivable 103,365 85.527 Inventories 38.444 34.982 Total current assets S244.659 S210.234 Xet fixed assets 6~.165 42.436 Total assets $311.824 S252.6~0 Accounts payable $30,761 S 23,109 Accruals 30,477 22.656 Notes payable 16.7 1

~

14,217 Total current liabilities S 77,955 S 59,982 Long-term debt "6.264 63,914 Total liabilities $154,219 S 123,896 Common stock 100.000 90,000 Retained earnings 5~.6(b 38,774 Total common equity Si 5".605 S 128.

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"4 Total liabilities and equity S3 11.824 S 252,670

a. The company's sales for 2002 were S455. 150,000. and EBITDA was 15 percent of sales.

Furthermore, depreciation amounted to 1 1 percent of net fixed assets, interest charges were

"5.000. the state-plus-federal corporate tax rate was 40 percent, and Laiho pays 40 percent of its net income out in dividends. Assume the firm has no amortization expense.

Given this information, construct Laiho's 2002 income statement. (Hint: You might find it easiest to select the balance sheets, then copy them, and then paste them to an Excel worksheet.

You might have to move the data around some in the worksheet to get things lined up properly.)

b. Next, construct the firm's statement of retained earnings for the year ending December 31, 2002. and then its 2002 statement of cash flows.

c. Calculate net operating working capital, total operating capital, net operating profit alter operating cash flow, and free cash flow for 2002.

d. Calculate the firm's FAA and MVA for 2002. Assume that Laiho had 10 million shares outstanding, that the vear-end closing stock price was Si ".25 per share, and its after-tax cost of capital was 12 percent.