12. The calculation of a firm's Market Value Added (MVA) and EconomicValue Added (EVA) Ryker, your newly appointed boss, has tasked you with evaluating the following financial data for Allied Biscuit Co. to determine how Aled Biscuit's value has changed over the past year. The investment firm for which you work will make a positive (or "buy") recommendation to its investing clients If Allied Biscuit's value has increased over the past year, a neutral (or "hold") recommendation if the value has remained constant, or a negative (or "sell") recommendation if the value has decreased. He has recommended that you use several metrics to ascertain how the firm's value has changed, and he has provided you with the following income statement and balance sheet. Interest expense 31,500 EBT Tax expense (40%) 25,000 $120,000 48,000 $72,000 $43,200 $28,800 $141,750 56,700 $85,050 $51,030 $34,020 Net income Common dividends Addition to retained earnings Excludes depreciation and amortization ery Ratio Values (1) * ExcelOMOMV5.2T_ms siist.exe 9:23 PM 2/9/2021 POM 9H 1 Allied Biscuit Co. Balance Sheet December 31, Year 2 Assets: Year 2 Year 1 Cash and cash equivalents $59,850 $57,000 Receivables 199,500 190,000 332,500 Inventory 349,125 ctory siinst.exe 18 ExcelOMOMv5.2....msi Ratio Values (1).xls 2014 e ON Excludes depreciation and amortization ols Current assets $608,475 $579,500 Net fixed assets 389,025 $997,500 370,500 $950,000 Total current assets Liabilities and Equity: Accounts payable Accruals $149,625 97,256 $142,500 92,625 199,500 3434,625 is Notes payable Total current liabilities 209,475 $456,356 192,019 182,875 Long-term debt ductory Ratio Values (1) ExcelOMQMV5.2...msi T.exe siist.exe e 1 Q Search Ch 06: Assignment - Accounting for Financial Management Excludes depreciation and amortization ols $648,375 $617,500 Total liabilities Common stock (si par) Retained earnings 69,825 66,500 Total equity Total liabilities and equity 279,300 $349,125 $997,500 266,000 $332,500 $950,000 69,825 66,500 Shares outstanding Weighted average cost of capital 7.98% 7.30% 5 actory Ratio Values (1).xls ExcelOMQMV5.2.1.msi Sainst exe PON To facilitate your analysis, complete the following table, and use the results to answer the related questions. (Note: Round all percentage change answers to two decimal places. If a dollar value is below $100, round your answer to two decimal places. If your answer is negative use a minus- sign.) Is Company Growth and Performance Metrics Metric Year 2 Year 1 Percentage Change General Metrics $1,000,000 Sales $1,050,000 $85,050 16 $72,000 $107.000 $361,594 s $1.08 $ Net income Net cash flow (NCF) Net operating working capital (NOWC) Earnings per share (EPS) Dividends per share (DPS) Book value per share (BVPS) Cash flow per share (CFPS) Market price per share $0.73 $ 0.00% 55.00 S 8.079 $ $19.75 $21.73 auctory A Ratio Values() ExcelOMQM5 21 mai 925 2/3 sinst.exe POM QH i 11 0 Year 2 Year 1 Percentage Change Metric MVA Calculation Market value of equity $ $ 15.53% % Book value of equity $349,125 $332,500 Market Value Added (MVA) $ $980,875 Year 2 Year 1 Percentage Change Metric EVA Calculation $103,950 5 5.00% $ 7.99% 7.30 Net operating profit after-tax (NOPAT) Investor-supplied operating capital Weighted average cost of capital Dollar cost of capital Return on invested capital (ROIC) Economic Value Added (EVA) $ 14.78 13.50 96 36 $44,061 actory Using the change in Allied Biscuit's EVA as the decision criterion, which type of investment recommendation should you make to your clients Ratio Values (1) ExcelOMOMS 21. msi 925 2/9/2 sistere POM Using the change in Allied Biscuit's EVA as the decision criterion, which type of investment recommendation should you make to your clients? A hold recommendation A buy recommendation O A sell recommendation Which of the following statements are correct? Check all that apply. Other things remaining constant, Allied Biscuit's EVA will increase when its ROIC exceeds its WACC. An increase in the number of common shares outstanding must increase the market value of the firm's equity. For any given year, one way to compute Allied Biscuit's EVA is as the difference between its NOPAT and the product of its operating capital and its weighted average cost of capital Allied Biscuit's NCF is calculated by adding its annual interest expense to the corresponding year's net income. The percentage change in Allied Biscuit's MVA indicates that its management has increased the firm's value. She 15 siinst.exe # ExcelOMOMv5.2.1...msi Ratio Values (1) 9:25 PM 2/9/202 12. The calculation of a firm's Market Value Added (MVA) and EconomicValue Added (EVA) Ryker, your newly appointed boss, has tasked you with evaluating the following financial data for Allied Biscuit Co. to determine how Aled Biscuit's value has changed over the past year. The investment firm for which you work will make a positive (or "buy") recommendation to its investing clients If Allied Biscuit's value has increased over the past year, a neutral (or "hold") recommendation if the value has remained constant, or a negative (or "sell") recommendation if the value has decreased. He has recommended that you use several metrics to ascertain how the firm's value has changed, and he has provided you with the following income statement and balance sheet. Interest expense 31,500 EBT Tax expense (40%) 25,000 $120,000 48,000 $72,000 $43,200 $28,800 $141,750 56,700 $85,050 $51,030 $34,020 Net income Common dividends Addition to retained earnings Excludes depreciation and amortization ery Ratio Values (1) * ExcelOMOMV5.2T_ms siist.exe 9:23 PM 2/9/2021 POM 9H 1 Allied Biscuit Co. Balance Sheet December 31, Year 2 Assets: Year 2 Year 1 Cash and cash equivalents $59,850 $57,000 Receivables 199,500 190,000 332,500 Inventory 349,125 ctory siinst.exe 18 ExcelOMOMv5.2....msi Ratio Values (1).xls 2014 e ON Excludes depreciation and amortization ols Current assets $608,475 $579,500 Net fixed assets 389,025 $997,500 370,500 $950,000 Total current assets Liabilities and Equity: Accounts payable Accruals $149,625 97,256 $142,500 92,625 199,500 3434,625 is Notes payable Total current liabilities 209,475 $456,356 192,019 182,875 Long-term debt ductory Ratio Values (1) ExcelOMQMV5.2...msi T.exe siist.exe e 1 Q Search Ch 06: Assignment - Accounting for Financial Management Excludes depreciation and amortization ols $648,375 $617,500 Total liabilities Common stock (si par) Retained earnings 69,825 66,500 Total equity Total liabilities and equity 279,300 $349,125 $997,500 266,000 $332,500 $950,000 69,825 66,500 Shares outstanding Weighted average cost of capital 7.98% 7.30% 5 actory Ratio Values (1).xls ExcelOMQMV5.2.1.msi Sainst exe PON To facilitate your analysis, complete the following table, and use the results to answer the related questions. (Note: Round all percentage change answers to two decimal places. If a dollar value is below $100, round your answer to two decimal places. If your answer is negative use a minus- sign.) Is Company Growth and Performance Metrics Metric Year 2 Year 1 Percentage Change General Metrics $1,000,000 Sales $1,050,000 $85,050 16 $72,000 $107.000 $361,594 s $1.08 $ Net income Net cash flow (NCF) Net operating working capital (NOWC) Earnings per share (EPS) Dividends per share (DPS) Book value per share (BVPS) Cash flow per share (CFPS) Market price per share $0.73 $ 0.00% 55.00 S 8.079 $ $19.75 $21.73 auctory A Ratio Values() ExcelOMQM5 21 mai 925 2/3 sinst.exe POM QH i 11 0 Year 2 Year 1 Percentage Change Metric MVA Calculation Market value of equity $ $ 15.53% % Book value of equity $349,125 $332,500 Market Value Added (MVA) $ $980,875 Year 2 Year 1 Percentage Change Metric EVA Calculation $103,950 5 5.00% $ 7.99% 7.30 Net operating profit after-tax (NOPAT) Investor-supplied operating capital Weighted average cost of capital Dollar cost of capital Return on invested capital (ROIC) Economic Value Added (EVA) $ 14.78 13.50 96 36 $44,061 actory Using the change in Allied Biscuit's EVA as the decision criterion, which type of investment recommendation should you make to your clients Ratio Values (1) ExcelOMOMS 21. msi 925 2/9/2 sistere POM Using the change in Allied Biscuit's EVA as the decision criterion, which type of investment recommendation should you make to your clients? A hold recommendation A buy recommendation O A sell recommendation Which of the following statements are correct? Check all that apply. Other things remaining constant, Allied Biscuit's EVA will increase when its ROIC exceeds its WACC. An increase in the number of common shares outstanding must increase the market value of the firm's equity. For any given year, one way to compute Allied Biscuit's EVA is as the difference between its NOPAT and the product of its operating capital and its weighted average cost of capital Allied Biscuit's NCF is calculated by adding its annual interest expense to the corresponding year's net income. The percentage change in Allied Biscuit's MVA indicates that its management has increased the firm's value. She 15 siinst.exe # ExcelOMOMv5.2.1...msi Ratio Values (1) 9:25 PM 2/9/202