Example: HOND The financial statements of Flathead Manufacturing Company are shown below: Flathead Lake Manufacturing Income Statement 2012 Sales $9,300,000 Cost of Goods Sold 5.750.000 Depreciation Expense 550,000 Gross Profit $ 3,000,000 Selling and Administrative Expenses 2,200,000 EBIT S 800,000 Interest Expense 200.000 Income before Tax $ 600.000 Taxes 375,000 Net Income $ 225.000 2012 Flathead Lake Manufacturing Comparative Balance Sheets 2011 Cash $ 50,000 $ 40,000 Accounts Receivable 570,000 600.000 Inventory 530.000 460.000 Total Current Assets $1,150,000 $1,100,000 Fixed Assets 2,050,000 1,400,000 Total Assets $3.200.000 $2.500.000 Accounts Payable Bank Loans Total Current Liabilities Long-term Bonds Total Liabilities Common Stock (200.000 shares) Retained Earnings Total Equity Total Liabilities and Equity $ 320,000 $300,000 480,000 400,000 $ 800,000 $ 700,000 1,500,000 1,000,000 $ 2,300,000 $1,700,000 200,000 200,000 700,000 600.000 $ 900,000 $ 800,000 $3,200,000 $2.500.000 Calculate the following 1) Net operating profit after taxes 2012 2) Net Operating Working Capital (NOWC) 2012 3) Free Cash Flow (FCF) 2012 if the net Investment in operating capital equal $ 100,000 4) Return on Invested Capital (ROIC) 2012. 5) Net Operating Working Capital (NOWC) 2011 6) Return on Invested Capital (ROIC) 2011 assuming the Net Income for the year 2011 equal $200,000 7) Tax Rate 0.625