Please use a couple of concise and directed sentences to type your responses to each of the following questions. PLEASE USE CITATIONS FOR EACH QUESTION!
Please review the financial economic profit calculation you completed in the Excel Set to answer the questions along with online sources. PLEASE CITE!!
6. Weaknesses are also internal to the firm and are things that threaten the profitability or survival of the firm. What do you believe to be Volkswagens greatest weakness Why?
7. Wealth creating opportunities are external to the firm. Using what you learned in your prior courses, in the areas of product, supply chain management, human capital, or finance, what single opportunity does Volkswagen have that you believe will add the greatest wealth for Volkswagen shareholders in the future? Why?
8. Rewording the prior question, what single opportunity does Volkswagen have that you believe will add the greatest benefit for another stakeholder group in the future? Please name the stakeholder group and explain the opportunity and why.
9. Threats are also external to the firm. Using what you learned in your prior courses, in the areas of product, supply chain management, human capital, or finance, what single threat does Volkswagen face that you believe could impact the financials of the firm or possibly the survival of the firm. Why?
10. List and describe something that is unique to Volkswagen that you believe has value?
Volkswagen's Balance Sheet: \begin{tabular}{|c|c|c|c|c|c|c|c|c|c|} \hline Year & & 2016 & 2017 & & 2018 & 2019 & 2020 & 2021 & 2022 \\ \hline Total Assets & $ & 485,752 & $500,525 & & 543,161 & 1578.626 & $589,347 & 1626,685 & =668.681 \\ \hline Operating Liabilities & $ & 27,712 & 27,998 & $ & 28,771 & 27,784 & 26,999 & 27,698 & $26,910 \\ \hline Net Operating Assets & & 458,040 & $472,528 & + & 514,390 & $550,842 & 562,347 & $598,987 & 641,771 \\ \hline Total Debt & $ & 183,544 & 193,802 & $ & 6,299 & $235,222 & $238,001 & $255,760 & $248,878 \\ \hline Total Equity and Claims & & 274,497 & $278,726 & + & 288,091 & +315,619 & $324,346 & $343,227 & $392,893 \\ \hline Total Debt, Equity and Claims & & 458,040 & $472528 & $ & 514,390 & $550,842 & 562,347 & $598,987 & $641,771 \\ \hline \end{tabular} \begin{tabular}{|c|c|c|c|c|c|c|c|} \hline \multicolumn{8}{|l|}{ Volkswagen's Income Statement: } \\ \hline Year & 2016 & 2017 & 2018 & 2019 & 2020 & 2021 & 2022 \\ \hline Total Revenue & $257,578 & $272,140 & ( $279,608 & $299,504 & $264,237 & $296,621 & $330,336 \\ \hline Cost of Revenue, & $207,352 & $219,106 & $223,278 & $240,261 & $216,665 & $239,072 & $268,579 \\ \hline Selling, General and Dth & 41,806 & 36,652 & 39,828 & 39,137 & 36,102 & 34,491 & $25,030 \\ \hline Dperating Income & 8.421 & 16,382 & 16,501 & 20,107 & 11,470 & $23,058 & $36,727 \\ \hline \end{tabular} Given information for Yolkswagen: Cost of debt Volkswagen (from the footnotes to the financial statements) Beta for Volkswagen Motors (from Yahoo or other financial sources) Normalized risk free rate of return in the market (observing the 10 rate on government issued securiti Equity risk premium (from historical studies of the market) Market value of debt (use book or amount disclosed in the footnotes if different) Number of common shares outstanding Market price of the common stock Market value of equity (number of shares times the stock price on balance sheet date) \begin{tabular}{|r|r|} \hline & 1.83% \\ 1.27 \\ \hline 3.00% \\ \hline 5.00% \\ \hline248,878 \\ \hline5.744 \\ \hline13.49 \\ \hline77,487 \end{tabular} Calculate the required return (reighted average cost of capital) \begin{tabular}{|c|c|c|c|} \hline Market & Weights & Component & Weighted \\ \hline Values & & Cost & Cost \\ \hline 248.878 & 76% & 1.83% & 1.40% \\ \hline 77.487 & 24% & 9.35% & 2.22% \\ \hline 326,365 & & & \\ \hline \end{tabular} Required return (weighted average cost of capital). Calculate the Economic Profit (Economic Value Added) \begin{tabular}{|c|c|c|c|c|c|c|c|c|c|c|c|c|} \hline Year & \multicolumn{2}{|r|}{2016} & & \multicolumn{2}{|l|}{2017} & \multicolumn{2}{|l|}{2018} & \multicolumn{2}{|l|}{2019} & 2020 & 2021 & 2022 \\ \hline Net Operating Assets & & & & 472,528 & +$ & 514,390 & & 550,842 & & 562,347 & $598,987 & $641,771 \\ \hline times the required return & & 3.62% & & 3.62% & & 3.62% & & 3.62% & & 3.62% & 3.62% & 3.62% \\ \hline Required income in dollars & $ & 16,560 & $ & 17,084 & $ & 18,597 & $ & 19,915 & $ & 20,331 & 21,656 & $23,203 \\ \hline Year & & 2016 & & 2017 & & 2018 & & 2019 & & 2020 & 2021 & 2022 \\ \hline - Dperating Income earned & & 8,421 & & 16,382 & & 16,501 & & 20,107 & +$ & 11,470 & 23,058 & =36,727 \\ \hline Less required income & $ & 16,560 & $ & 17,084 & $ & 18.597 & $ & 19,915 & $ & 20,331 & 21,656 & $23,203 \\ \hline Economic profit or [loss] & $ & {[8,139]} & $ & [702] & $ & {[2,096]} & & 191 & $ & {[8,861]} & 1,402 & $13,524 \\ \hline Another way to look at this: & & & & & & & & & & & & \\ \hline Return on invested capital & & 1.84% & & 3.47% & & 3.21% & & 3.65% & & 2.04% & 3.85% & 5.72% \\ \hline Weighted average cost of capital & & 3.62% & & 3.62% & & 3.62% & & 3.62% & & 3.62% & 3.62% & 3.62% \\ \hline Spread & & 1.78% & & 0.15% & & 0.41% & & 0.03% & & 1.58% & 0.23% & 2.11% \\ \hline \end{tabular}
