Ta), your newly appointed boss, has tasked you with evaluating the following financial data for Allied Biscuit Co. to determine how Allied Biscuit'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 Allied Biscuit's value has increased over the past year, a neutral (or "hold") recommendation if the value has remained constant, or a negative (or "sell") 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. Allied Biscuit Co. Income Statement January 1 - December 31, Year 2 Year 2 Sales $1,925,000 Expenses 1,540,000 EBITDA 385,000 Depreciation and amortization expense 67,375 EBIT 317,625 Interest expense 57,750 EBT 259,875 Tax expense (40%) 103,950 Net Income $155,925 Common dividends $93,555 Addition to retained earnings 62,370 Excludes depreciation and amortization Year 1 $1,750,000 1,435,000 315,000 61,250 253,750 43,750 210,000 84,000 $126,000 $75,600 50,400 Year 1 $99,750 332,500 581,875 1,014,125 648,375 $1,662,500 Allied Biscuit Co. Balance Sheet December 31, Year 2 Assets: Year 2 Cash and cash equivalents $114,713 Receivables 382,375 Inventory 669,156 Current assets 1,166,244 Net foxed assets 745,631 Total assets $1,911,875 Liabilities and Equity Accounts payable $286,781 Accruals 186,408 Notes payable 401,494 Total current liabilities 874,683 Long-term debt 368,036 Total liabilities 1,242,719 Common stock ($1 par) 133,831 Retained earnings 535,325 Total equity 669,156 Total debt and equity $1,911,875 $249,375 162,094 349,125 760,594 320,031 1,080,625 116,375 465,500 581,875 $1,662,500 Shares outstanding Weighted average cost of capital 133,831 7.98% 116,375 7.30 To facilitate your analysis, complete the following table, and use the results to answer the related questions. Round your percentage change answers to two decimal places Company Growth and Performance Metrics Using the change in Allied Biscuit's EVA as the decision Percentage criterion, which type of investment recommendation Metric Year 2 Year 1 Change should you make to your clients? General Metrics A sell recommendation Sales $1,925,000 $1,750,000 A hold recommendation Net Income $155,925 $126,000 A buy recommendation Net cash flow (NCF) $187.250 Net operating working capital (NOWC) $693,055 Which of the following statements are correct? Check all that apply. Earnings per share (EPS) $1.08 Dividends per share (DPS) $0.70 Allied Biscuit's NCF is calculated by adding its annual depreciation and amortization expense to Book value per share (BVPS) $5.00 0.00% the corresponding year's EBITDA. Cash flow per share (CFPS) 3.73% An increase in the number of common shares Market price per share $22.22 $19.75 outstanding must increase the market value of MVA Calculation the firm's equity Market value of equity 29.38% The percentage change in Allied Biscuit's MVA Book value of equity $669,156 $581,875 indicates that its management has increased the Market Value Added (MVA) $1,716,531 firm's value. Other things remaining constant, Allied Biscuit's EVA Calculation EVA will increase when its ROIC exceeds its Net operating profit after-tax (NOPAT) $190,575 WACC Investor supplied operating capital 15.00% For any given year, one way to compute Allied Weighted average cost of capital 7.98% 7.30% Biscuit's EVA is as the difference between its Dollar cost of capital 25.71% NOPAT (such as $152,250) and the product of its Return on invested capital (ROIC) 8.87% operating capital ($1,251,031) and its weighted average cost of capital ($7.30). Economic Value Added (EVA) $75,819 11:00