12. The calculation of a firm's Market Value Added (MVA) and EconomicValue Added (EVA) Alexs, your newly appointed boss, has tasked you with evaluating the following financial data for Atherton Corp. to determine has changed over the past year. The investment firm for which you work will make a positive (or "buy") recommendation to its e Atherton's value has increased over the past year, a neutral (or "bold") recommendation of the value has remained constant, recommendation of the value has decreased. He has recommended that you use several metrics to certain how the tim's value has changed, and be has provided you with the following income statement and balance sheet therto's va sting cent tv ( 2 Year 2 Year 1 $7,350,000 $7,000,000 Sales Expenses 5,880,000 5,740,000 *EBITDA $1,470,000 $1.260,000 Depreciation and amortization expense 257,250 245,000 EBIT $1.212.750 $1,015.000 220,500 175.000 Interest expense $992,250 1040,000 EBT 396,900 336.000 Tax expense (40%) Atherton Corp. Balance Sheet 90F Partly sunny 754PM 611002 SC AUURIN VRJU BAL 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. 3 Interest expense 175,000 220,500 $992.250 EBT $340,000 Tax expense (40%) 396,900 336,000 cory Net Income $595,350 $504,000 Common dividends $357,210 $302,400 Addition to retained earnings $238,140 $201,600 Excludes depreciation and amortization Atherton Corp. Balance Sheet D' O O >> ( M C O 90F Partly sunny Atherton Corp. Balance Sheet December 31, Year 20 Assets: Year 2 Year 1 Cash and cash equivalents $438,900 $399,000 Receivables 1,463,000 1,330,000 2,560,250 Inventory 2,327,500 To facilitate your analysis, complete the following table, and use the results to answer the related questions. (Note: Round of 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 seam() sign.) 90F Partly sunny uctory Receivables 1,495,000 1:330,000 Inventory 2,500,250 2,327,500 Current assets $4,462,150 $4,056,500 Net fixed assets 2,852,850 2,593,500 Total current assets $7,315,000 $6,650.000 Liabilities and Equity: Accounts payable $1.097,250 $997,500 Accruals 713,213 648,375 Notes payable 1.536,150 1,396,500 #24TIC 43.346 613 Titulnurant Sisilitie 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 se (3 sign.) 90F Partly sunny Common dividends Addition to retained earrings $238,140 $201.600 Excludes depreciation and amortization Notes payable 1,536,150 1,396,500 Total current liabilities $3,346,613 $3,042,375 Long-term debt 1,408,138 1,280,125 Total liabilities $4,754,750 $4,322,500 Common stock ($1 par) $12,050 465,500 Retained earnings 2,048,200 1,862,000 Total equity $2.560,250 $2,327,500 $6,650,000 $7,315,000 Total abilities and equity 465,500 $12,050 Shares outstanding To facilitate your analysis, complete the following table, and use the results to answer the related questions. (Note: Round a percentage change answers to two decimal places. If a dollar value is below $200, round your answer to two decimal places. If your aeris negative uir a mus (1 90F Partly sunny 7 ^5 THIN 6/11/20 0 pols S ctory Tax expense (40%) feet income Common dividends Addition to retained earnings Excludes depreciation and amortization Total liabilities Common stock ($1 par) Retained earnings Total equity Total abilities and equity Shares outstanding Weighted average cost of capital 306,900 336,000 $595,350 $500,000 $357.210 $302,400) $230,140 $201.000 $4,754,750 $4,322.500 $12,050 465,500 2,048,200 1,862.000 $2.560,250 $2.327.500 $7.315,000 $6.650.000 512,050 465,500 7.90% 7.30% the following table, and use the results to answer the related questions (Note: Round at percentage hage d your answer to two decimal posons. If your answer segove e a mel Partly sunny ISLIM 6/11/2 ory to tacitate your anabis, complete the fog table, and in the resuts to answers to two decimal places it a dilar value below 9200, round you are sign) Company Growth and Performance Metrics Metric Year 2 General Metrics Sales Net income $7,350,000 $595.350 Net cash now (NCF) Net operating working capital (NOWC) $2,651,667 Earnings per share (EPS) Dividends per share (DPS) $0.30 Book value per share (BVS) Cash flow per share (CPS) Market price per share $26.74 Metric MVA Callation Market value of equity Book value of equity Market Value Added [MVA) Metric 5 S Year 2 $2.500.250 $ Year 1 $2.327.500 66,125 the enote 10 er deomal pesif ve a Year 1 Percentage Change $2,000.000 104.000 1249,000 4150 15.00 CON 2328 10% Percentage Change 15.31% Year 2 S NE Year 1 Percentage Change change 10 Partly sunny a VISINA 4 pols S ictory MVA Catulation Harket value of equity) $ book value of equity Market Value Added (HVA) $ Metric Year 2 Percentage Change EVA Calculation 1727,650 Net operating profit after-tax (NOPAT) Investor supplied operating capital 10:00 Weighted average cost of capital 2.90% Dollar cost of capital 20 2015 S 106 Return on invested capital (ROIC) $1 $288.438 Economic Value Added (EVA) Using the change in Athertor's EVA as the decision criterion, which type of vente me to your deter OA sell recommendation O A hold recommendation OA buy recommendation Which of the following statements are corect? Check all that apply The percentage change in Atherton's MV cates that its management has cressed the tra $2,560,250 $2.327 500 $6,866,125 18.41% Year 3 7.30 WA 58 50 Partly sunny THOT 251PM 5 A O LA VALEARING (EVA) $200 438 Using the change in Atherton's EVA as the decision criterion, which type of investment recommendation showed ake to y des A sell recommendation O A hold recommendation OA buy recommendation Which of the following statements are correct? Check all that apply. The percentage change in Atherton's MVA indicates that its management has increased the 's D Investor-supplied operating capital is recorded as accounts payable, aceruals, and short-term intents. D Atherton's NCF is calculated by adding its annual depreciation and amortization expense to the cerpending reary ITDA The percentage change in Atherton's EVA indicates that management ses increased its valve. D For any given yeat, one way to compute Atherton's EVA is as the difference between NOPAT of op pal and its weighted average cost of capital. Grade It Now Seve & Continue Cote wbout saving H C O U O 90 Partly sunny 7557M VIURE F 3 O 12. The calculation of a firm's Market Value Added (MVA) and EconomicValue Added (EVA) Alexs, your newly appointed boss, has tasked you with evaluating the following financial data for Atherton Corp. to determine has changed over the past year. The investment firm for which you work will make a positive (or "buy") recommendation to its e Atherton's value has increased over the past year, a neutral (or "bold") recommendation of the value has remained constant, recommendation of the value has decreased. He has recommended that you use several metrics to certain how the tim's value has changed, and be has provided you with the following income statement and balance sheet therto's va sting cent tv ( 2 Year 2 Year 1 $7,350,000 $7,000,000 Sales Expenses 5,880,000 5,740,000 *EBITDA $1,470,000 $1.260,000 Depreciation and amortization expense 257,250 245,000 EBIT $1.212.750 $1,015.000 220,500 175.000 Interest expense $992,250 1040,000 EBT 396,900 336.000 Tax expense (40%) Atherton Corp. Balance Sheet 90F Partly sunny 754PM 611002 SC AUURIN VRJU BAL 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. 3 Interest expense 175,000 220,500 $992.250 EBT $340,000 Tax expense (40%) 396,900 336,000 cory Net Income $595,350 $504,000 Common dividends $357,210 $302,400 Addition to retained earnings $238,140 $201,600 Excludes depreciation and amortization Atherton Corp. Balance Sheet D' O O >> ( M C O 90F Partly sunny Atherton Corp. Balance Sheet December 31, Year 20 Assets: Year 2 Year 1 Cash and cash equivalents $438,900 $399,000 Receivables 1,463,000 1,330,000 2,560,250 Inventory 2,327,500 To facilitate your analysis, complete the following table, and use the results to answer the related questions. (Note: Round of 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 seam() sign.) 90F Partly sunny uctory Receivables 1,495,000 1:330,000 Inventory 2,500,250 2,327,500 Current assets $4,462,150 $4,056,500 Net fixed assets 2,852,850 2,593,500 Total current assets $7,315,000 $6,650.000 Liabilities and Equity: Accounts payable $1.097,250 $997,500 Accruals 713,213 648,375 Notes payable 1.536,150 1,396,500 #24TIC 43.346 613 Titulnurant Sisilitie 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 se (3 sign.) 90F Partly sunny Common dividends Addition to retained earrings $238,140 $201.600 Excludes depreciation and amortization Notes payable 1,536,150 1,396,500 Total current liabilities $3,346,613 $3,042,375 Long-term debt 1,408,138 1,280,125 Total liabilities $4,754,750 $4,322,500 Common stock ($1 par) $12,050 465,500 Retained earnings 2,048,200 1,862,000 Total equity $2.560,250 $2,327,500 $6,650,000 $7,315,000 Total abilities and equity 465,500 $12,050 Shares outstanding To facilitate your analysis, complete the following table, and use the results to answer the related questions. (Note: Round a percentage change answers to two decimal places. If a dollar value is below $200, round your answer to two decimal places. If your aeris negative uir a mus (1 90F Partly sunny 7 ^5 THIN 6/11/20 0 pols S ctory Tax expense (40%) feet income Common dividends Addition to retained earnings Excludes depreciation and amortization Total liabilities Common stock ($1 par) Retained earnings Total equity Total abilities and equity Shares outstanding Weighted average cost of capital 306,900 336,000 $595,350 $500,000 $357.210 $302,400) $230,140 $201.000 $4,754,750 $4,322.500 $12,050 465,500 2,048,200 1,862.000 $2.560,250 $2.327.500 $7.315,000 $6.650.000 512,050 465,500 7.90% 7.30% the following table, and use the results to answer the related questions (Note: Round at percentage hage d your answer to two decimal posons. If your answer segove e a mel Partly sunny ISLIM 6/11/2 ory to tacitate your anabis, complete the fog table, and in the resuts to answers to two decimal places it a dilar value below 9200, round you are sign) Company Growth and Performance Metrics Metric Year 2 General Metrics Sales Net income $7,350,000 $595.350 Net cash now (NCF) Net operating working capital (NOWC) $2,651,667 Earnings per share (EPS) Dividends per share (DPS) $0.30 Book value per share (BVS) Cash flow per share (CPS) Market price per share $26.74 Metric MVA Callation Market value of equity Book value of equity Market Value Added [MVA) Metric 5 S Year 2 $2.500.250 $ Year 1 $2.327.500 66,125 the enote 10 er deomal pesif ve a Year 1 Percentage Change $2,000.000 104.000 1249,000 4150 15.00 CON 2328 10% Percentage Change 15.31% Year 2 S NE Year 1 Percentage Change change 10 Partly sunny a VISINA 4 pols S ictory MVA Catulation Harket value of equity) $ book value of equity Market Value Added (HVA) $ Metric Year 2 Percentage Change EVA Calculation 1727,650 Net operating profit after-tax (NOPAT) Investor supplied operating capital 10:00 Weighted average cost of capital 2.90% Dollar cost of capital 20 2015 S 106 Return on invested capital (ROIC) $1 $288.438 Economic Value Added (EVA) Using the change in Athertor's EVA as the decision criterion, which type of vente me to your deter OA sell recommendation O A hold recommendation OA buy recommendation Which of the following statements are corect? Check all that apply The percentage change in Atherton's MV cates that its management has cressed the tra $2,560,250 $2.327 500 $6,866,125 18.41% Year 3 7.30 WA 58 50 Partly sunny THOT 251PM 5 A O LA VALEARING (EVA) $200 438 Using the change in Atherton's EVA as the decision criterion, which type of investment recommendation showed ake to y des A sell recommendation O A hold recommendation OA buy recommendation Which of the following statements are correct? Check all that apply. The percentage change in Atherton's MVA indicates that its management has increased the 's D Investor-supplied operating capital is recorded as accounts payable, aceruals, and short-term intents. D Atherton's NCF is calculated by adding its annual depreciation and amortization expense to the cerpending reary ITDA The percentage change in Atherton's EVA indicates that management ses increased its valve. D For any given yeat, one way to compute Atherton's EVA is as the difference between NOPAT of op pal and its weighted average cost of capital. Grade It Now Seve & Continue Cote wbout saving H C O U O 90 Partly sunny 7557M VIURE F 3 O