1.When analyzing a firm's financial performance, should the analyst focus on the incremental after-tax profits or the incremental after-tax cash flows of the firm?Explain your reasoning!

2.Holding all else constant, how would a significant increase in interest bearing debt impact the measure of the firm's Free Cash Flow?Explain!

3.If a firm uses an accelerated depreciation expense method (MACRS) versus straight line depreciation expense for a newly acquired asset, what would be the impact on the firm's operating profit after taxes in the first year the asset was in use?What would be the impact on the firm's free cash flow after taxes in the first year the asset was in use?Which method of depreciation would you recommend?

4.In 2019, the firm's operating profit after taxes decreased significantly, however, the firm's free cash flow increased in 2019.Assuming the firm's depreciation expense and W/C did not change, what is a likely explanation for the set of performance measures for this firm in 2019?Based on this information, was the firm's performance in 2019 good, bad, or unclear?

5.In 2019, the firm's operating profit after taxes was constant, the firm's free cash flow decreased significantly, and the firm's EVA was constant.What is a likely explanation for the set of performance measures for this firm in 2019?Based on this information, was the firm's performance in 2019 good, bad, or unclear?

6.What could account for the fact that the firm's economic value added and ROIC was positive and significantly greater than their peer firm in 2019, while the firm's abnormal stock return compared to their peer was negative in 2019?

7.In January of 2020, Ford Motor Corporation is going to announce their plans to start constructing a production facility in Kenya in the second quarter of 2020.It is expected that Ford will not begin selling cars and trucks in Kenya until the fourth quarter of 2021 (depreciation expense will not begin until the firm starts to utilize the assets in their operations).Along with the announcement to expand into Kenya, Ford announced their expectations of a very high return on invested capital from this investment opportunity.The project will be financed at the firm's current debt to asset ratio (w_d) of around 25%.What is the likely impact of this decision for Ford's performance in fiscal year 2020?More specifically, explain your predicted impact on the following performance measures:

Operating Margin:

Operating Return on Assets:

Free Cash Flow:

Economic Value Added:

Total Shareholders' Return: