L&C Tech: Income Statements for Year Ending

December 31

(In Million Dollars) 2020 2019

Sales $945 $900

Operating costs excl. D&A 812 774

EBITDA $133 $126

Depreciation 33 31

EBIT $100 $95

Interest Expense 10 10

EBT $90 $85

Taxes (40%) 36 34

Net income $54 $51

L&C Tech: December 31 Balance

Sheets

(In Million Dollars)

Assets 2020 2019

Cash $47 $45

Short-term invest. 3 3

Accounts Receivable 283 270

Inventories 141 135

Total current assets $474 $453

Net fixed assets 330 315

Total assets $804 $768

Liabilities and equity

Accounts payable $94 $90

Accruals 47 45

Notes payable 26 9

Current liabilities $167 $144

Long-term debt 94 90

Total liabilities $261 $234

Common stock 444 444

Retained Earnings 99 90

Common equity $543 $534

Total liabilities and

equity $804 $768

a) Using the given information calculate the firms FCF & ROIC in year 2020.

b.) Using earnings retention model, forecast next 3 years FCFs.

c) Your CEO wants to know if the growth added value to shareholders, what would be your answer? Assume that the firms WACC= 8%.

d)Assume you are in a job interview and they ask you Why is FCF important for shareholders?. Give a short (2-4 sentences) explanation.