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PROVIDE EQUATIONS OR FORMULAS a. Using the financial statements shown below, calculate net operating working capital, total net operating capital, net operating profit after taxes,

PROVIDE EQUATIONS OR FORMULAS

a. Using the financial statements shown below, calculate net operating working capital, total net operating capital, net operating profit after taxes, free cash flow, and return on invested capital for the most recent year. The federal-plus-state tax rate is 25%.

Lan & Chen Technologies: Income Statements for Year Ending December 31
(Millions of Dollars) 2020 2019
Sales $945,000 $900,000
Expenses excluding depreciation and amortization 812,700 774,000
EBITDA $132,300 $126,000
Depreciation and amortization 33,100 31,500
EBIT $99,200 $94,500
Interest Expense 10,400 8,900
EBT $88,800 $85,600
Taxes (25%) 22,200 21,400
Net income $66,600 $64,200
Common dividends $43,300 $41,230
Addition to retained earnings $23,300 $22,970
Lan & Chen Technologies: December 31 Balance Sheets
(Millions of Dollars)
Assets 2020 2019
Cash and cash equivalents $47,250 $45,000
Short-term investments 3,800 3,600
Accounts Receivable 283,500 270,000
Inventories 141,750 135,000
Total current assets $476,300 $453,600
Net fixed assets 330,750 315,000
Total assets $807,050 $768,600
Liabilities and equity
Accounts payable $94,500 $90,000
Accruals 47,250 45,000
Notes payable 17,400 9,000
Total current liabilities $159,150 $144,000
Long-term debt 90,000 90,000
Total liabilities $249,150 $234,000
Common stock $444,600 $444,600
Retained Earnings 113,300 90,000
Total common equity $557,900 $534,600
Total liabilities and equity $807,050 $768,600
Key Input Data
Tax rate 25%
Net operating working capital (NOWC)
2020 NOWC = Operating current assets - Operating current liabilities
2020 NOWC = ?? - ??
2020 NOWC = ??
2019 NOWC = Operating current assets - Operating current liabilities
2019 NOWC = ?? - ??
2019 NOWC = ??
Total net operating capital (TNOC)
2020 TNOC = NOWC + Fixed assets
2020 TNOC = ?? + ??
2020 TNOC = ??
2019 TNOC = NOWC + Fixed assets
2019 TNOC = ?? + ??
2019 TNOC = ??
Investment in total net operating capital
2020 2019
2020 Inv. In TOC = TNOC - TNOC
2020 Inv. In TOC = ?? - ??
2020 Inv. In TOC = ??
Net operating profit after taxes
2020 NOPAT = EBIT x ( 1 - T )
2020 NOPAT = ?? x ??
2020 NOPAT = ??
Free cash flow
2020 FCF = NOPAT - Investment in total net operating capital
2020 FCF = ?? - ??
2020 FCF = ??
Return on invested capital
2020 ROIC = NOPAT / Total net operating capital
2020 ROIC = ?? / ??
2020 ROIC = ??
b. Assume that there were 15 million shares outstanding at the end of the year, the year-end closing stock price was $65 per share, and the after-tax cost of capital was 10%. Calculate EVA and MVA for the most recent year.
Additional Input Data
Stock price per share $65.00
# of shares (in thousands) 15,000
After-tax cost of capital 10.0%
Market Value Added
MVA = Stock price x # of shares - Total common equity
MVA = ?? x ?? - ??
MVA = ?? - ??
MVA = ??
Economic Value Added
EVA = NOPAT - (Operating Capital x After-tax cost of capital)
EVA = ?? - ?? x ??
EVA = ?? - ??
EVA = ??

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