Question
Consider the balance sheets and selected data from the income statement of Keith Corporation that appear below: Assets December 31 2012 2011 Cash 1,500 1,000
Consider the balance sheets and selected data from the income statement of Keith Corporation that appear below:
Assets December 31
2012 2011
Cash 1,500 1,000
Marketable Securities 1,800 1,200
Accounts receivables 2,000 1,800
Inventories 2,900 2,800
Total Current Assets 8,200 6,800
Gross Fixed Assets 29,500 28,100
Less: Accumulated Depreciation 14,700 13,100
Net Fixed Assets 14,800 15,100
Total Assets 23,000 21,800
Liabilities and Stockholder's Equity
Accounts payable 1,600 1,500
Notes payable 2,800 2,200
Accruals 200 300
Total Current Liabilities 4,600 4,000
Long-Term Debt 5,000 5,000
Total liabilities 9,600 9,000
Common Stock 10,000 10,000
Retained earnings 3,400 2,800
Total Stockholder's equity 13,400 12,800
Total liab. And stockholder's equity 23,000 21,800
Keith Corporations Income Statement (2012)
Depreciation Expense 1,600
Earning Before Interest and Taxes (EBIT) 2,700
Interest Expense 367
Net Profit After Taxes 1,400
Tax Rate 40%
a. Calculate the free cash flow (FCF) for the year ended December 31, 2012?
b. Compute Return on invested capital for 2012? If the cost of capital is 10%, how is the firm performing? Discuss.
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