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Ryker, your newly appointed boss, has tasked you with evaluating the following financial data for Western Gas & Electric Co. to determine how Western G&E'S
Ryker, your newly appointed boss, has tasked you with evaluating the following financial data for Western Gas & Electric Co. to determine how Western G&E'S value has changed over the past year. The investment firm for which you work will make a positive (or"buy") recommendation to its investing clients if Western G&E's value has increased over the past year, a neutral (or "hold recommendation if the value has remained constant, or a negative (or "sellr) recommendation if the value has decreased. He has recommended that you use several metrics to ascertain how the firm's value has changed, and he has provided you with the following income statement and balance sheet. Western Gas & Electric Co. Western Gas & Electric Co. Balance Sheet $4,312,500 $3,750,000 Cash and cash equivalents 1,309,219 1,458,843 1,389,375 $3,740,625 $3,562,500 $534,375 582,187 Liabilities and Equity: 10% $349,312 785,531 1,711,336 Total current liabilities Addition to retained earnings Excludes depreciation and amortization 2,315,625 $3,740,625 $3,562,500 To fadilitate your analysis, complete the following table, and use the results to answer the related questions. Round your percentage change answers to twa Company Growth and Performance M Using the change in Western G&E'S EVA as the decision criterion, which type of investment recommendation Year Year ch $4,312,500 $3,750,000 Netcash fiow (NCF) Net operating working capital (NOWC) which of the following statements are correct? Check a $1,355,977 Dividends per share (DPS) Book value per share (BVPS) Cash flow per share (CFPS) western G&E's net income is growing at a rate greater than its sales. This could imply that either its revenues are growing more quickly thanits 18.63% managing its costs while achieving the reported growth in sales. Other things remaining constant, either ewent should increase the value of the firm Western G&E'S NCF is calculated by adding its MVA Market value of equity Market Value Added (MVA) $3,678,281 Investor-supplied operating capital is recorded as Net operating profit after-tax (NOPAT) Investor-supplied operating capital $426,937 average cost of capital For any given year, one way to compute Western Dollar cost of capital Return on invested capital (ROIC) Economic Value Added (EVA) G&E's EVA is as the difference between its NOPAT (such as $326,250) and the product of its operating capital ($2,680,7B1) and its weighted average cost of capital ($7.30). Other things remaining constant, Western G&E'S 14.78% EVA will increase when its ROIC exceeds its
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