Hello! I have been working on this assignment and wanted to get a second set of eyes to help me with this:

The attachment of the necessary financial documentation is below...

Assume that you are Cochran's assistant and that you must help her answer the following questions for Meissner...These are the questions I am answering :

b.What do you conclude from the statement of cash ?ows?

d. What is Computron's net operating pro?t after taxes (NOPAT)? What are operating current assets? What are operating current liabilities? How much net operating working capital and total net operating capital does Computron have?

e. What is Computron's free cash ?ow (FCF)? What are Computron's "net uses" of its FCF?

f. Calculate Computron's return on invested capital. Computron has a 10% cost of capital (WACC). Do you think Computron's growth added value?

g. Cochran also has asked you to estimate Computron's EVA. She estimates that the after-tax cost of capital was 10% in both years.

A B C 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 Assets Cash and equivalents Short-term investments Accounts receivable Inventories Total current assets Net plant and equipment Total assets D E F G MicroDrive Inc. December 31 Balance Sheets (Millions of Dollars) Liabilities and Equity Accounts payable Notes payable Accruals Total current liabilities Long-term bonds Total liabilities Preferred stock (1,000,000 shares) Common stock (50,000,000 shares) Retained earnings Total common equity Total liabilities and equity 2015 50 500 1,000 $ 1,550 2,000 $ 3,550 $ $ $ $ $ $ 200 280 300 780 1,200 1,980 100 500 970 1,470 3,550 2014 60 40 380 820 $ 1,300 1,700 $ 3,000 $ $ 190 130 280 $ 600 1,000 $ 1,600 ### ### 800 $ 1,300 $ 3,000 SECTION 6-2 SOLUTIONS TO SELF-TEST A firm has $8 million in total assets. It has $3 million in current liabilities, $2 million in longterm debt, and $1 million in preferred stock. What is the total value of common equity? Total assets Current liabilities Long-term debt Preferred stock $8,000,000 $3,000,000 $2,000,000 $1,000,000 Common equity $2,000,000 SECTION 6-3 SOLUTIONS TO SELF-TEST A firm has $2,000,000 million in earnings before taxes. The firm has an interest expense of $300,000 and depreciation of $200,000; it has no amortization. What is its EBITDA? Earnings before taxes Interest Depreciation Amortization $2,000,000 $300,000 $200,000 $0 EBITDA $2,500,000 SECTION 6-4 SOLUTIONS TO SELF-TEST A firm had a retained earnings balance of $3 million in the previous year. In the current year, its net income is $2.5 million. If it pays $1 million in common dividends in the current year, what it its resulting retained earnings balance? Previous retained earnings balance Current net income Common dividends $3,000,000 $2,500,000 $1,000,000 Current retained earnings balance $4,500,000 SECTION 6-5 SOLUTIONS TO SELF-TEST A firm has inventories of $2 million for the previous year and $1.5 million for the current year. What impact does this have on net cash provided by operations? Previous year's inventories Current year's inventories Change in net cash provided by operations $2,000,000 $1,500,000 $500,000 SECTION 6-6 SOLUTIONS TO SELF-TEST A firm has net income of $5 million. Assuming that depreciation of $1 million is its only noncash expense, what is the firm's net cash flow? Net income Depreciation $5,000,000 $1,000,000 Net cash flow $6,000,000 SECTION 6-7 SOLUTIONS TO SELF-TEST A firm's total net operating capital for the previous year was $2 million. For the current year, its total net operating capital is $2.5 million and its NOPAT is $1.2 million. What is its free cash flow for the current year? Previous year's total net operating capital Current year's total net operating capital Current year's NOPAT $2,000,000 $2,500,000 $1,200,000 Net investment in operating capital $500,000 Free cash flow $700,000 SECTION 6-8 SOLUTIONS TO SELF-TEST A company's NOPAT is $12 million and its total net operating capital is $100 million. What is the ROIC? NOPAT Total net operating capital $12 $100 ROIC 12% A firm has $100 million in total net operating capital. Its return on invested capital is 14 percent, and its weighted average cost of capital is 10 percent. What is its EVA? Total net operating working capital ROIC WACC Free cash flow $100,000,000 14% 10% $4,000,000 SECTION 6-9 SOLUTIONS TO SELF-TEST If a corporation has $85,000 in taxable income, what is its tax liability? Taxable income $85,000 Base amount of tax from Table 7-6 Base of tax range Taxable income above range Tax rate in base $13,750 $75,000 $10,000 34% Tax liability $17,150 5/10/2014 Mini Case Data Computron's Income Statement 2014 INCOME STATEMENT Net sales Cost of Goods Sold (Except depr.) Other Expenses Depreciation and amortization Total Operating Costs Earnings before interest and taxes (EBIT) Less interest Pre-tax earnings Taxes (40%) Net Income $ 3,432,000 2,864,000 340,000 18,900 $ 3,222,900 $ 209,100 62,500 $ 146,600 58,640 $ 87,960 Dividends Tax rate 2015 $ 5,834,400 4,980,000 720,000 116,960 5,816,960 17,440 176,000 (158,560) (63,424) (95,136) $ $ $ $ $22,000 40% $11,000 40% 2014 2015 Computron's Balance Sheets Assets Cash and equivalents Short-term investments Accounts receivable Inventories Total current assets Gross fixed assets Less: Accumulated depreciation Net plant and equipment Total assets $ $ $ $ $ Liabilities and equity Accounts payable Notes payable Accruals Total current liabilities Long-term bonds Common Stock Retained Earnings Total Equity Total Liabilites and Equity $ $ $ $ $ 9,000 48,600 351,200 715,200 1,124,000 491,000 146,200 344,800 1,468,800 $ 145,600 200,000 136,000 481,600 323,432 460,000 203,768 663,768 1,468,800 7,282 20,000 632,160 1,287,360 1,946,802 1,202,950 263,160 939,790 2,886,592 $ $ $ $ $ 324,000 720,000 284,960 1,328,960 1,000,000 460,000 97,632 557,632 2,886,592 $ $ $ $ Computron's Statement of Cash Flows 2015 Operating Activities Net Income before preferred dividends Noncash adjustments Depreciation and amortization Due to changes in working capital Change in accounts receivable Change in inventories Change in accounts payable Change in accruals Net cash provided by operating activities $ 116,960 $ Investing activities Cash used to acquire fixed assets Change in short-term investments Net cash provided by investing activities $ $ Financing Activities Change in notes payable Change in long-term debt Payment of cash dividends Net cash provided by financing activities (711,950) 28,600 (683,350) 520,000 676,568 (11,000) $ 1,185,568 $ $ Corporate Tax Rates for 2014 If a corporation's taxable (280,960) (572,160) 178,400 148,960 (503,936) $ Net change in cash and equivilents Cash and securities at beginning of the year Cash and securities at end of the year It pays this amount on the base of the (95,136) Plus this percentage on the excess (1,718) 9,000 7,282 If a corporation's taxable income is between: (1) (2) $0 $50,000 $50,000 $75,000 $75,000 $100,000 $100,000 $335,000 $335,000 $10,000,000 $10,000,000 $15,000,000 $15,000,000 $18,333,333 $18,333,333 and up base of the bracket: (3) $0 $7,500 $13,750 $22,250 $113,900 $3,400,000 $5,150,000 $6,416,667 on the excess over the base (4) 15.0% 25.0% 34.0% 39.0% 34.0% 35.0% 38.0% 35.0% Example Find the tax, the marginal tax rate, and the average tax rate for the following situation. Taxable Income: Base taxable income: Base tax: Marginal tax rate: Tax: Average tax rate: $40,000 $36,900.00 $5,081.25 25.0% $5,856.25 14.6%