Exhibit 18.11 presents deferred-tax assets and liabilities for ToyCo.

a. Using Exhibit 18.8 as a guide, reorganize the deferred-tax table into two categories: net operating deferred-tax assets (net of operating deferred-tax liabilities), and net nonoperating deferred-tax assets (net of nonoperating deferred-tax liabilities).

b. In year 3, ToyCo generated $200.7 million in operating taxes on $673.6 million of EBITA. Using this information, what are the cash taxes in year 3? What is the percent of operating taxes that were deferred, and what is the operating cash tax rate?

c. ToyCo has working capital of $400 million, fixed assets equal $800 million, and debt equal to $600 million. Use these data and the reorganized deferred taxes in parts A and B to create invested capital and total funds invested for year 3. Use equity as the plug to get total funds invested to reconcile.

412 TAXES EXHIBIT 18.11 ToyCo: Deferred-Tax Assets and Liabilities $ million Year1 Year2 Year 3 Deferred-tax assets Accounts receivable Inventories Losses and tax credit carryforwards Pension Deferred-tax assets 20.5 24.6 39.1 10.0 94.2 16.817.3 20.2 34.4 34.1 105.5 15.9 29.6 26.6 89.4 Deferred-tax liabilities Convertible debentures Depreciation of long-lived assets Equity method investment Deferred-tax liabilities 56.8 120.3 26.9 204.0 40.2 47.7 47.6 121.5 87.9 169.1 412 TAXES EXHIBIT 18.11 ToyCo: Deferred-Tax Assets and Liabilities $ million Year1 Year2 Year 3 Deferred-tax assets Accounts receivable Inventories Losses and tax credit carryforwards Pension Deferred-tax assets 20.5 24.6 39.1 10.0 94.2 16.817.3 20.2 34.4 34.1 105.5 15.9 29.6 26.6 89.4 Deferred-tax liabilities Convertible debentures Depreciation of long-lived assets Equity method investment Deferred-tax liabilities 56.8 120.3 26.9 204.0 40.2 47.7 47.6 121.5 87.9 169.1