14. Problem 3.14 (Free Cash Flow)

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Arlington Corporation's financial statements (dollars and shares are in millions) are provided here.

Balance Sheets as of December 31
	2019		2018
Assets
Cash and equivalents	$ 15,000		$ 11,000
Accounts receivable	35,000		30,000
Inventories	34,115		29,000
Total current assets	$ 84,115		$ 70,000
Net plant and equipment	50,000		46,000
Total assets	$134,115		$116,000
Liabilities and Equity
Accounts payable	$ 10,100		$ 8,500
Accruals	7,500		7,000
Notes payable	6,600		5,000
Total current liabilities	$ 24,200		$ 20,500
Long-term bonds	15,000		15,000
Total liabilities	$ 39,200		$ 35,500
Common stock (4,000 shares)	50,000		50,000
Retained earnings	44,915		30,500
Common equity	$ 94,915		$ 80,500
Total liabilities and equity	$134,115		$116,000

Income Statement for Year Ending December 31, 2019
Sales	$237,000
Operating costs excluding depreciation and amortization	190,000
EBITDA	$ 47,000
Depreciation & amortization	5,000
EBIT	$ 42,000
Interest	4,500
EBT	$ 37,500
Taxes (25%)	9,375.00
Net income	$ 28,125.00
Dividends paid	13,710.00

Enter your answers in millions. For example, an answer of $25,000,000,000 should be entered as 25,000. Round your answers to the nearest whole number, if necessary.

1. What was net operating working capital for 2018 and 2019? Assume that all cash is excess cash; i.e., this cash is not needed for operating purposes.

   2018	$ million
   2019	$ million

2. What was Arlington's 2019 free cash flow?

   $ million

3. Construct Arlington's 2019 statement of stockholders' equity.

   Statement of Stockholders' Equity, 2019
   	Common Stock		Retained Earnings	Total Stockholders' Equity
   	Shares	Amount
   Balances, 12/31/18	million	$ million	$ million	$ million
   2019 Net Income			million
   Cash Dividends			million
   Addition to retained earnings				million
   Balances, 12/31/19	million	$ million	$ million	$ million

4. What was Arlington's 2019 EVA? Assume that its after-tax cost of capital is 10%. Round your answer to the nearest cent.

   $ million

5. What was Arlington's MVA at year-end 2019? Assume that its stock price at December 31, 2019 was $25. Round your answer to the nearest cent.

   $ million