16. Ch6. 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 Atherton Corp. to determine how Atherton'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 Atherton'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. Atherton Corp. Income Statement January 1 - December 31, Year 2. Balance Sheet December 31 , Year 2 \begin{tabular}{l|l|l|} \hline Current assets & $2,433,900 & $1,738,500 \\ \hline Net fixed assets & 1,556,100 & 1,111,500 \\ \hline Total current assets & $3,990,000 & $2,850,000 \\ \hline Liabitities and Equity: & & \\ \hline Accounts payable & $598,500 & $427,500 \\ \hline Accruals & 389,025 & 277,875 \\ \hline Notes payable & 837,900 & $98,500 \\ \hline Total current liabilities & $1,825,425 & $1,303,875 \\ \hline Long-term debt & 768,075 & 548,625 \\ \hline Total liabilities & $2,593,500 & $1,852,500 \\ \hline Common stock (\$1 par) & 279,300 & 199,500 \\ \hline Retained earnings & 1,117,200 & 798,000 \\ \hline Total equity & $1,396,500 & $997,500 \\ \hline Total liablities and equity & $3,990,000 & $2,850,000 \\ \hline Shares outstanding & 279,300 & 199,500 \\ \hline Weighted average cost of capital & 7,98% & 7.30% \\ \hline \end{tabular} To facilitate your analysis, complete the following table, and use the resuits 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 negabive use a minus ( ) sign.) Using the change in Atherton's EVA as the decision criterion, which type of investment recommendation should yeu make to your ciente? A buy recommendatien A hald recommendatien A sell recommendation Which of the following statements are correct? Check alf that apply? Atherton's NCF is calculated by adding its annual interest expense to the correspond ng year's ne An increase in the number of common shares outstanding must incresse the market value of the For any given year, ofie way to compute Atherton's EVA is as the difference between les NOPAT ar and its weighted average cost of capital, Atherton'a net incame is growing ot a rate greater than its sales. This could imply that either its Its expenses or that manag ment is being effective in managing its costs while achinving the rep remaining constant, either event should increase the value of tha firm. The percentage change in Atherton's EVA indicates that manegenent has decreasedits value. 16. Ch6. 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 Atherton Corp. to determine how Atherton'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 Atherton'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. Atherton Corp. Income Statement January 1 - December 31, Year 2. Balance Sheet December 31 , Year 2 \begin{tabular}{l|l|l|} \hline Current assets & $2,433,900 & $1,738,500 \\ \hline Net fixed assets & 1,556,100 & 1,111,500 \\ \hline Total current assets & $3,990,000 & $2,850,000 \\ \hline Liabitities and Equity: & & \\ \hline Accounts payable & $598,500 & $427,500 \\ \hline Accruals & 389,025 & 277,875 \\ \hline Notes payable & 837,900 & $98,500 \\ \hline Total current liabilities & $1,825,425 & $1,303,875 \\ \hline Long-term debt & 768,075 & 548,625 \\ \hline Total liabilities & $2,593,500 & $1,852,500 \\ \hline Common stock (\$1 par) & 279,300 & 199,500 \\ \hline Retained earnings & 1,117,200 & 798,000 \\ \hline Total equity & $1,396,500 & $997,500 \\ \hline Total liablities and equity & $3,990,000 & $2,850,000 \\ \hline Shares outstanding & 279,300 & 199,500 \\ \hline Weighted average cost of capital & 7,98% & 7.30% \\ \hline \end{tabular} To facilitate your analysis, complete the following table, and use the resuits 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 negabive use a minus ( ) sign.) Using the change in Atherton's EVA as the decision criterion, which type of investment recommendation should yeu make to your ciente? A buy recommendatien A hald recommendatien A sell recommendation Which of the following statements are correct? Check alf that apply? Atherton's NCF is calculated by adding its annual interest expense to the correspond ng year's ne An increase in the number of common shares outstanding must incresse the market value of the For any given year, ofie way to compute Atherton's EVA is as the difference between les NOPAT ar and its weighted average cost of capital, Atherton'a net incame is growing ot a rate greater than its sales. This could imply that either its Its expenses or that manag ment is being effective in managing its costs while achinving the rep remaining constant, either event should increase the value of tha firm. The percentage change in Atherton's EVA indicates that manegenent has decreasedits value