PART (A): CASE STUDY (1) - 65% 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 2020 (in Millions of Dollars) Sales 200 Cost of Goods Sold 84.5 Gross Margin 115.5 Selling and General Expenses (23.4) Research and Development (4.2) Other operating expenses (8.2) Income from equity investments 7.5 Operating Income 87.2 Interest Income 4 Interest Expense (6) Other income (See Note 2) 14 Income before income taxes 99.2 Income taxes 34.65 Net Income 64.55 Alma Corporation Statement of Shareholders' Equity for Fiscal Year 2020 (in Millions of Dollars) Balance, end of 2019 202.8 Net Income 64.55 Unrealized gain on debt investments (net of tax) 4.44 Foreign currency translation gain (net of tax) 5.29 Dividends paid to common stockholders (13) Preferred stock dividends (2.08) Sale of common stock 27.2 Repurchase of common stock (2.8) Balance, end of 2020 286.4 Alma Corporation Statement of Financial Position (Balance Sheet) as of 31st December 2020 (in Millions of Dollars) Current Assets Cash 50.40 Cash Equivalents 10.50 Short-term trading investment 3.30 Sort-term investments available for sale (See Note 3) 4.50 Net Accounts Receivables 13.90 Prepaid expenses and other current assets 5 Deferred Income taxes 2.40 Total Current Assets 90.00 Long-term Assets Equity and other investments 20 Long-term Investments available for sale (See Note 3) 7.35 Property, Plant and Equipment 316.1 Other Assets 22.4 Other Intangible Assets 4.15 Total Long-term Assets 370 TOTAL ASSETS 460 Current Liabilities Accounts Payable 91.8 Accrued Taxes 0.85 Unrealized Revenues (Deferred Revenues) 1.77 Current maturities of long-term debt 1.58 Other accrued expenses 4 Total Current Liabilities 100 Long-term liabilities Long-term de bt 61.35 Other long-term liabilities 12.25 Total long-term liabilities 73.6 Shareholders' Equity (Common Stock) 210 Shareholders' Equity (Preferred Stock) 17 Other additional paid-in-capital 23.75 Retained earnings 35.65 Total shareholders' Equity 286.4 TOTAL LIABILITIES AND OWNERS' EQUITY. 460 Notes: 1. The firm's 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 8.00 Gain on Assets sales 6.50 Restructuring Charges (Operating) (2) 3. Short-term and Long-term investments, available for sale, are debt securities. 4. The cost of equity of ALMA Corporation is estimated to be 12%. 5. Net Operating Assets as in 31" December 2019 was $305.13 (millions). a Required: 1. Prepare a reformulated statement of Owners' Equity for 2020 for Alma Corporation. (10%) 2. Prepare a reformulated Income statement for 2020. (12%) 3. Prepare a reformulated statement of financial position (Balance Sheet) for 2020. (14%) 4. Calculate the following for Alma Corporation for the year 2020. (14%) a. Return on Net Financial Assets (RNFA). b. Return on Net Operating Assets (RNOA). Explain the Ratio. c. Return on Common Equity (ROCE). Explain the Ratio. d. Financial Leverage Ratio (ELEV). e. Net Borrowing Cost (NBC). f. Growth Rate of Common Stock Equity. Explain the Ratio. g. Assets Turnover. Explain the Ratio. 5. The financial analyst predicts that the company's free cash flow (C-1) will grow beyond 2020 by 5% per year. Estimate the equity value of ALMA Corporation at the end of 2020 using Free Cash Flow equity valuation method. (15%)