1 Financial Statements, Clash Flow, and Taxes 2 3 Laiho Industries: Balance Sheets as of December 31 4 (in thousands of dollars) 5 2021 6 Assets 7 Cash $102,839 8 Accounts receivable 101,167 9 Inventories 37.838 10 Total current assets 50 11 Net fixed assets 66,304 12 Total assets $0 13 14 Liabilities and equity $28,702 15 Accounts payable 16 Accruals 31,270 17 Notes payable 15,337 18 Total current liabilities 50 19 Long-term debt 73,363 20 Total liabilities 50 21 Common stock 105,500 22 Retained earnings 53.976 23 Total common equity $0 24 Total liabilities and equity $0 25 26 a. Constructing the firm's 2021 income statement 27 28 Laiho Industries: financial information for 2021 29 (in thousands of dollars) 30 31 Sales $435,150 32 EBITDA as a percentage of sales 14% 33 Depr. as a % of fixed assets 19% 34 Tax rate 25% 35 Interest expense $8,944 36 Dividend payout ratio 47.25% 37 38 Laiho Industries: Income Statement for Year Ending December 31, 2021 39 (in thousands of dollars) 40 2021 Formulas 41 Sales #N/A Operating costs excluding depreciation #N/A 42 and amortization. 43 EBITDA #N/A 44 Depreciation and amortization #N/A 45 EBIT #N/A 46 Interest #N/A 47 EBT #NA 48 Taxes (25%) #NIA Sheet1 2020 $90,255 84,349 34,294 50 43,343 $0 $21,910 23,554 12,967 SO 62,413 SO 93,000 38,397 SO $0 E D INA 49 Net Income 50 51 Common dividends #N/A 52 Addition to retained earnings ENIA 53 54 b. Constructing the statement of stockholders' equity for the year ending December 31, 2021, 55 and the 2021 statement of cash flows 56 57 Laiho Industries: Statement of Stockholders' Equity, December 31, 2021 58 (in thousands of dollars) Retained Common Stock Total Stockholders' Equity 59 Earnings 60 Balances, December 31, 2020 61 Common stock issue 62 2021 Net income 63 Cash dividends 64 Addition to retained earnings 65 Balances, December 31, 2021 66 67 Laiho Industries: Statement of Cash Flows for 2021 68 (in thousands of dollars) 69 Operating Activities Formulas 70 Net income #N/A 71 Depreciation and amortization #N/A 72 Increase in accounts payable WNUA 73 Increase in accruals WNIA 74 Increase in accounts receivable #N/A 75 Increase in inventories INJA 76 Net cash provided by operating activities UA 77 78 Investing Activities 79 Additions to property, plant, and equipment WNIA 80 Net cash used in investing activities 81 82 Financing Activities 83 Increase in notes payable TUA 84 Increase in long-term debt INA 85 Increase in common stock NIA 86 Payment of common dividends NIA 87 Net cash provided by financing activities NA 88- 89 Summary 90 Net increase/decrease in cash 91 Cash at the beginning of the year #N/A #N/A 92 Cash at the end of the year #N/A 93 94e. Calculating 2020 and 2021 net operating working capital (NOWC) and 2021 free cash flow (FCF) Sheet1 Ready A B 2021 #N/A IN/A IN/A INIA INA INIA WNIA #N/A INIA INIA IN/A B C E F 94 c. Calculating 2020 and 2021 net operating working capital (NOWC) and 2021 free cash flow (FCF) 95 Excesss cash SO 96 NOWC2020 (in thousands of dollars) #N/A 97 NOWC2021 (in thousands of dollars) #N/A #N/A 98 FCF 2021 (in thousands of dollars) 99 100 e. Calculating the firm's 2021 EVA 101 After-tax cost of capital #N/A 102 EVA2021 (in thousands of dollars) 103 104 f. Calculating the firm's MVA at year-end 2021 105 Stock price 106 Shares outstanding 107 MVA2021 (in thousands of dollars) #N/A 108 109 110 111 9.5% $20 10,000 k. Five banks offer nominal rates of 4% on deposits, but A pays interest annually, B pays semiannually, C pays quarterly, D pays monthly, and E pays daily. Assume 365 days in a year. 1. What effective annual rate does each bank pay? If you deposit $4,000 in each bank today, how much will you have in each bank at the end of 1 year? 2 years? Round your answers to two decimal places. B C D EAR % % % % FV after 1 year $ $ $ $ FV after 2 years $ $ $ $ $ 2. If the TVM is the only consideration, what nominal rate will cause all of the banks to provide the same effective annual rate as Bank A? Round your answers to two decimal places. B Nominal rate % 3. Suppose you don't have the $4,000 but need it at the end of 1 year. You plan to make a series of deposits- annually for A, semiannually for B, quarterly ford monthly for D, and daily for E-with payments beginning today. How large must the payments be to each bank? Round your answers to the nearest cent. A C D Payment $ 4. Even if the five banks provided the same effective annual rate, would a rational Investor be indifferent between the banks? It is more likely that an investor would prefer the bank that compounded frequently. L Suppose you borrow $16,000. The interest rate is 6%, and it requires 4 equal end-of-year payments. Set up an amortization schedule that shows the annual payments, interest payments, principal repayments, and beginning and ending loan balances. Round your answers to the nearest cent. If your answer is zero, enter "0", 1 Financial Statements, Clash Flow, and Taxes 2 3 Laiho Industries: Balance Sheets as of December 31 4 (in thousands of dollars) 5 2021 6 Assets 7 Cash $102,839 8 Accounts receivable 101,167 9 Inventories 37.838 10 Total current assets 50 11 Net fixed assets 66,304 12 Total assets $0 13 14 Liabilities and equity $28,702 15 Accounts payable 16 Accruals 31,270 17 Notes payable 15,337 18 Total current liabilities 50 19 Long-term debt 73,363 20 Total liabilities 50 21 Common stock 105,500 22 Retained earnings 53.976 23 Total common equity $0 24 Total liabilities and equity $0 25 26 a. Constructing the firm's 2021 income statement 27 28 Laiho Industries: financial information for 2021 29 (in thousands of dollars) 30 31 Sales $435,150 32 EBITDA as a percentage of sales 14% 33 Depr. as a % of fixed assets 19% 34 Tax rate 25% 35 Interest expense $8,944 36 Dividend payout ratio 47.25% 37 38 Laiho Industries: Income Statement for Year Ending December 31, 2021 39 (in thousands of dollars) 40 2021 Formulas 41 Sales #N/A Operating costs excluding depreciation #N/A 42 and amortization. 43 EBITDA #N/A 44 Depreciation and amortization #N/A 45 EBIT #N/A 46 Interest #N/A 47 EBT #NA 48 Taxes (25%) #NIA Sheet1 2020 $90,255 84,349 34,294 50 43,343 $0 $21,910 23,554 12,967 SO 62,413 SO 93,000 38,397 SO $0 E D INA 49 Net Income 50 51 Common dividends #N/A 52 Addition to retained earnings ENIA 53 54 b. Constructing the statement of stockholders' equity for the year ending December 31, 2021, 55 and the 2021 statement of cash flows 56 57 Laiho Industries: Statement of Stockholders' Equity, December 31, 2021 58 (in thousands of dollars) Retained Common Stock Total Stockholders' Equity 59 Earnings 60 Balances, December 31, 2020 61 Common stock issue 62 2021 Net income 63 Cash dividends 64 Addition to retained earnings 65 Balances, December 31, 2021 66 67 Laiho Industries: Statement of Cash Flows for 2021 68 (in thousands of dollars) 69 Operating Activities Formulas 70 Net income #N/A 71 Depreciation and amortization #N/A 72 Increase in accounts payable WNUA 73 Increase in accruals WNIA 74 Increase in accounts receivable #N/A 75 Increase in inventories INJA 76 Net cash provided by operating activities UA 77 78 Investing Activities 79 Additions to property, plant, and equipment WNIA 80 Net cash used in investing activities 81 82 Financing Activities 83 Increase in notes payable TUA 84 Increase in long-term debt INA 85 Increase in common stock NIA 86 Payment of common dividends NIA 87 Net cash provided by financing activities NA 88- 89 Summary 90 Net increase/decrease in cash 91 Cash at the beginning of the year #N/A #N/A 92 Cash at the end of the year #N/A 93 94e. Calculating 2020 and 2021 net operating working capital (NOWC) and 2021 free cash flow (FCF) Sheet1 Ready A B 2021 #N/A IN/A IN/A INIA INA INIA WNIA #N/A INIA INIA IN/A B C E F 94 c. Calculating 2020 and 2021 net operating working capital (NOWC) and 2021 free cash flow (FCF) 95 Excesss cash SO 96 NOWC2020 (in thousands of dollars) #N/A 97 NOWC2021 (in thousands of dollars) #N/A #N/A 98 FCF 2021 (in thousands of dollars) 99 100 e. Calculating the firm's 2021 EVA 101 After-tax cost of capital #N/A 102 EVA2021 (in thousands of dollars) 103 104 f. Calculating the firm's MVA at year-end 2021 105 Stock price 106 Shares outstanding 107 MVA2021 (in thousands of dollars) #N/A 108 109 110 111 9.5% $20 10,000 k. Five banks offer nominal rates of 4% on deposits, but A pays interest annually, B pays semiannually, C pays quarterly, D pays monthly, and E pays daily. Assume 365 days in a year. 1. What effective annual rate does each bank pay? If you deposit $4,000 in each bank today, how much will you have in each bank at the end of 1 year? 2 years? Round your answers to two decimal places. B C D EAR % % % % FV after 1 year $ $ $ $ FV after 2 years $ $ $ $ $ 2. If the TVM is the only consideration, what nominal rate will cause all of the banks to provide the same effective annual rate as Bank A? Round your answers to two decimal places. B Nominal rate % 3. Suppose you don't have the $4,000 but need it at the end of 1 year. You plan to make a series of deposits- annually for A, semiannually for B, quarterly ford monthly for D, and daily for E-with payments beginning today. How large must the payments be to each bank? Round your answers to the nearest cent. A C D Payment $ 4. Even if the five banks provided the same effective annual rate, would a rational Investor be indifferent between the banks? It is more likely that an investor would prefer the bank that compounded frequently. L Suppose you borrow $16,000. The interest rate is 6%, and it requires 4 equal end-of-year payments. Set up an amortization schedule that shows the annual payments, interest payments, principal repayments, and beginning and ending loan balances. Round your answers to the nearest cent. If your answer is zero, enter "0