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The following data applies to Big Co. Inc. (in millions of US $): Cash & marketable securities $75 Fixed assets $130 Net sales $600 Earnings
The following data applies to Big Co. Inc. (in millions of US $): Cash & marketable securities $75 Fixed assets $130 Net sales $600 Earnings Before Interests and Taxes (EBIT) $65 Net Earnings After Taxes (NEAT) $30 Quick Ratio ((CA-Inventory)/CL) 2.1 to 1 Current Ratio (CA/CL) 3.4 to 1 Average Collection Period (ACP) 45.6 days Return on Equity (ROE, NEAT/Net Common Equity) 13% Tax rate 25% On the Liabilities & Equity side, Big Co has only common equity, debt and current operating liabilities. a. Find BigCo's (1) Accounts Receivables, (2) Current Operating Liabilities, (3) Current Assets, (4) Total Assets, (5) Net Common Equity, and (7) Debt. (10 points) b. If BigCo managed to reduce its ACP by 15.60 days (to 30 days) while holding other things constant, how much cash could it generate? (10 points). C. What is BigCo's ROIC (post-tax) ? (10 points) The following data applies to Big Co. Inc. (in millions of US $): Cash & marketable securities $75 Fixed assets $130 Net sales $600 Earnings Before Interests and Taxes (EBIT) $65 Net Earnings After Taxes (NEAT) $30 Quick Ratio ((CA-Inventory)/CL) 2.1 to 1 Current Ratio (CA/CL) 3.4 to 1 Average Collection Period (ACP) 45.6 days Return on Equity (ROE, NEAT/Net Common Equity) 13% Tax rate 25% On the Liabilities & Equity side, Big Co has only common equity, debt and current operating liabilities. a. Find BigCo's (1) Accounts Receivables, (2) Current Operating Liabilities, (3) Current Assets, (4) Total Assets, (5) Net Common Equity, and (7) Debt. (10 points) b. If BigCo managed to reduce its ACP by 15.60 days (to 30 days) while holding other things constant, how much cash could it generate? (10 points). C. What is BigCo's ROIC (post-tax) ? (10 points)
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