11 Problem 4-3 Measuring Performance (LO2) Here are simplified financial statements for Watervan Corporation: 10 points...

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11 Problem 4-3 Measuring Performance (LO2) Here are simplified financial statements for Watervan Corporation: 10 points INCOME STATEMENT (Figures in $ millions) Net sales $ 881 Cost of goods sold 741 Depreciation 31 eBook Earnings before interest and taxes (EBIT) $ 109 Print Interest expense 12 Income before tax $ 97 References Taxes 20 Net income $ 77 BALANCE SHEET (Figures in $ millions) End of Year Start of Year Assets Current assets Long-term assets Total assets $ 369 $ 312 258 $ 627 222 $ 534 Liabilities and shareholders' equity Current liabilities Long-term debt Shareholders' equity $ 194 108 325 $157 121 256 Total liabilities and shareholders' equity $ 627 $ 534 The company's cost of canital is 25% M 11 Total liabilities and shareholders' equity $ 627 $ 534 10 points eBook Print References The company's cost of capital is 8.5%. Required: a. Calculate Watervan's economic value added (EVA). (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) b. What is the company's return on capital? (Use start-of-year rather than average capital.) (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) c. What is its return on equity? (Use start-of-year rather than average equity.) (Enter your answer as a percent rounded to 2 decimal places.) d. Is the company creating value for its shareholders? a. Economic value added b. Return on capital million % C. Return on equity % d. Is the company creating value for its shareholders? Yes 11 Problem 4-3 Measuring Performance (LO2) Here are simplified financial statements for Watervan Corporation: 10 points INCOME STATEMENT (Figures in $ millions) Net sales $ 881 Cost of goods sold 741 Depreciation 31 eBook Earnings before interest and taxes (EBIT) $ 109 Print Interest expense 12 Income before tax $ 97 References Taxes 20 Net income $ 77 BALANCE SHEET (Figures in $ millions) End of Year Start of Year Assets Current assets Long-term assets Total assets $ 369 $ 312 258 $ 627 222 $ 534 Liabilities and shareholders' equity Current liabilities Long-term debt Shareholders' equity $ 194 108 325 $157 121 256 Total liabilities and shareholders' equity $ 627 $ 534 The company's cost of canital is 25% M 11 Total liabilities and shareholders' equity $ 627 $ 534 10 points eBook Print References The company's cost of capital is 8.5%. Required: a. Calculate Watervan's economic value added (EVA). (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) b. What is the company's return on capital? (Use start-of-year rather than average capital.) (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) c. What is its return on equity? (Use start-of-year rather than average equity.) (Enter your answer as a percent rounded to 2 decimal places.) d. Is the company creating value for its shareholders? a. Economic value added b. Return on capital million % C. Return on equity % d. Is the company creating value for its shareholders? Yes