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The following are partial financial statements for an industrial firm that you are required to analyze and value. All amounts are in millions of dollars.

Alma Corporation

Income Statement for Fiscal Year 2019

(in Millions of Dollars)

Sales	200
Cost of Goods Sold	(85)
Gross Margin	115
Selling and General Expenses	(22.4)
Research and Development	(4.2)
Other operating expenses	(8.2)
Income from equity investments	7.5
Operating Income	87.7
Interest Income	8
Interest Expense	(15)
Other income (See Note 2)	14
Income before income taxes	94.2
Income taxes	32.97
Net Income	61.23

Alma Corporation

Statement of Shareholders Equity for Fiscal Year 2019

(in Millions of Dollars)

Balance, end of 2018	202.8
Net Income	61.23
Unrealized loss on debt investments	(4.44)
Foreign currency translation gain	6.29
Dividends paid to common stockholders	(16)
Preferred stock dividends	(1.25)
Sale of common stock	25
Repurchase of common stock	(3.4)
Balance, end of 2019	270.23

Alma Corporation

Statement of Financial Position (Balance Sheet) as of 31^st December 2019

(in Millions of Dollars)

Current Assets
Cash	34.23
Cash Equivalents	10.50
Short-term trading investment	3.30
Sort-term investments available for sale	4.50
Net Accounts Receivables	13.90
Prepaid expenses and other current assets	5
Deferred Income taxes	2.40
Total Current Assets	73.83
Long-term Assets
Equity and other investments	20
Long-term Investments available for sale	7.35
Property, Plant and Equipment	316.1
Other Assets	22.4
Other Intangible Assets	4.15
Total Long-term Assets	370
TOTAL ASSETS	443.83
Current Liabilities
Accounts Payable	90.8
Accrued Taxes	1.85
Unrealized Revenues (Deferred Revenues)	1.67
Current maturities of long-term debt	1.68
Other accrued expenses	4
Total Current Liabilities	100
Long-term liabilities
Long-term debt	60
Other long-term liabilities	13.60
Total long-term liabilities	73.6
Shareholders Equity (Common Stock)	200
Shareholders Equity (Preferred Stock)	11
Other additional paid-in-capital	23.63
Retained earnings	35.60
TOTAL SHAREHOLDERS EQUITY	270.23
TOTAL LIABILITIES AND OWNERS EQUITY.	443.83

Notes:

1. The firms tax rate is 35%.
2. Other income in the income statement includes the following (in millions of dollars):

Realized gain on available for sale investments	19.45
Loss on Assets sales	(3.45)
Debt Restructuring Charges (Financing)	(2)

3. The cost of equity of ALMA Corporation is estimated to be 10%.
4. Net Operating Assets as in 31^st December 2018 was $315.25 (millions).

Required:

1. Prepare a reformulated statement of Owners Equity for 2019 for Alma Corporation. (11 Marks)
2. Prepare a reformulated Income statement for 2019. (15 Marks)
3. Prepare a reformulated statement of financial position (Balance Sheet) for 2019. (15 Marks)
4. Calculate the following for Alma Corporation for the year 2019 and explain the ratio. (14 Marks)

1. Return on Net Financial Assets (RNFA).
2. Return on Net Operating Assets (RNOA). Explain the Ratio.
3. Return on Common Equity (ROCE). Explain the Ratio.
4. Financial Leverage Ratio (FLEV).
5. Net Borrowing Cost (NBC).
6. Growth Rate of Common Stock Equity. Explain the Ratio.
7. Assets Turnover. Explain the Ratio.

5. The financial analyst predicts that the companys free cash flow will grow beyond 2019 by 4% per year. Estimate the equity value of ALMA Corporation at the end of 2019 using Free Cash Flow equity valuation method. (Hint: Calculate Free Cash Flow for Alma Corporation for the year 2019. (20 Marks)