Two worksheets correspond to this assignment. One worksheet includes financial information for Nike and the other worksheet includes financial information for Caterpillar. Each worksheet includes the Balance Sheet and the Income Statement of the respective company. Below the Income Statement, you will find orange and blue boxes. Calculate the companys Free Cash Flow for the most current year by completing the orange color boxes in the worksheet. In addition, calculate the uses for each companys FCF by completing the blue boxes found below the FCF calculations. When you have completed the worksheet for Nike and Caterpillar, write an analysis (one page per company) summarizing your results. In your analysis, interpret the meaning of each companys FCF value. Describe the breakdown of how each company used this FCF. Include all five categories. From this Usage indicate how each companys shareholders and debt holders were affected during 2016. For example, explain whether shareholders from each company contributed or received money from the company in 2016. Also, explain whether debt holders of each company contributed or received money from the company in 2016. Also indicate if either company used any of its free cash flow to purchase short-term investments outside of the company. (30 points per company)

2012-05

2013-05

2014-05

2015-05

2016-05

2317

3337

2220

3852

3138

1440

2628

2922

2072

2319

3757

5965

5142

5924

5457

3280

3117

3434

3358

3241

3350

3434

3947

4337

4838

274

308

355

389

870

802

818

1968

1489

11531

13626

13696

15976

15025

5244

5500

6220

6352

7038

-2965

-3048

-3386

-3341

-3518

2279

2452

2834

3011

3520

201

131

131

131

131

535

382

282

281

281

919

993

1651

2201

2439

3934

3958

4898

5624

6371

15465

17584

18594

21600

21396

157

178

174

181

45

1588

1646

1930

2131

2191

246

290

636

245

244

1654

1572

1993

3375

2445

220

240

294

402

433

3865

3926

5027

6334

5358

228

1210

1199

1079

2010

991

1292

1544

1480

1770

1219

2502

2743

2559

3780

5084

6428

7770

8893

9138

3

3

3

3

3

4641

5184

5868

6776

7789

5588

5695

4871

4685

4151

149

274

85

1246

318

10381

11156

10824

12707

12258

15465

17584

18594

21600

21396

2012-05

2013-05

2014-05

2015-05

2016-05

24128

25313

27799

30601

32376

13657

14279

15353

16534

17405

10471

11034

12446

14067

14971

7431

7780

8766

9892

10469

7431

7780

8766

9892

10469

3040

3254

3680

4175

4502

-57

18

-136

30

121

2983

3272

3544

4205

4623

760

808

851

932

863

2223

2464

2693

3273

3760

21

2223

2485

2693

3273

3760

2223

2485

2693

3273

3760

1.21

1.39

1.52

1.9

2.21

1.18

1.35

1.49

1.85

2.16

1840

1795

1767

1723

1698

1879

1833

1812

1769

1742

3445

3767

4312

4824

5164

1022

NOWC =

Operating current assets

-

Operating current liabilities

NOWC =

-

NOWC =

NOWC =

Operating current assets

-

Operating current liabilities

NOWC =

-

NOWC =

TOC =

NOWC

+

Net Fixed assets

TOC =

+

TOC =

TOC =

NOWC

+

Net Fixed assets

TOC =

+

TOC =

Inv. In TOC =

TOC

-

TOC

Inv. In TOC =

-

Inv. In TOC =

NOPAT =

EBIT

x

( 1 - T )

NOPAT =

x

NOPAT =

FCF =

NOPAT

-

Net investment in operating capital

FCF =

-

FCF =

*

=

-

=

=

-

=

-

=

CATERPILLAR INC (CAT) BALANCE SHEET
Fiscal year ends in December. USD in millions except per share data.	2012-12	2013-12	2014-12	2015-12	2016-12
Assets
Current assets
Cash
Cash and cash equivalents	5490	6081	7341	6460	7168
Total cash	5490	6081	7341	6460	7168
Receivables	18952	17176	16764	15686	14503
Inventories	15547	12625	12205	9700	8614
Deferred income taxes	1547	1553	1739	1526
Prepaid expenses	988	900	818	1046	1682
Total current assets	42524	38335	38867	34418	31967
Non-current assets
Property, plant and equipment
Gross property, plant and equipment	29932	31316	31572	31977	31940
Accumulated Depreciation	-13471	-14241	-14995	-15887	-16618
Net property, plant and equipment	16461	17075	16577	16090	15322
Equity and other investments	272	272	257	246
Goodwill	6942	6956	6694	6615	6020
Intangible assets	4016	3596	3076	2821	2349
Deferred income taxes	2011	594	1404	1654	2790
Other long-term assets	17130	18068	17806	16653	16256
Total non-current assets	46832	46561	45814	44079	42737
Total assets	89356	84896	84681	78497	74704
Liabilities and stockholders' equity
Liabilities
Current liabilities
Short-term debt	12391	11031	11501	12846	13965
Accounts payable	6753	6560	6515	5023	4614
Accrued liabilities	5578	5115	5986	5110	4299
Deferred revenues	2978	2360	1697	1146	1167
Other current liabilities	2055	2231	2178	2178	2087
Total current liabilities	29755	27297	27877	26303	26132
Non-current liabilities
Long-term debt	27752	26719	27784	25170	22750
Capital leases				77	68
Pensions and other benefits	11085	6973	8963	8843	9357
Minority interest	50	67	80	76	76
Other long-term liabilities	3182	3029	3231	3219	3184
Total non-current liabilities	42069	36788	40058	37385	35435
Total liabilities	71824	64085	67935	63688	61567
Stockholders' equity
Common stock	4481	4709	5016	5238	5277
Retained earnings	29558	31854	33887	34208	27377
Treasury stock	-10074	-11854	-15726	-17640	-17478
Accumulated other comprehensive income	-6433	-3898	-6431	-6997	-2039
Total stockholders' equity	17532	20811	16746	14809	13137
Total liabilities and stockholders' equity	89356	84896	84681	78497	74704
CATERPILLAR INC (CAT) INCOME STATEMENT
Fiscal year ends in December. USD in millions except per share data.	2012-12	2013-12	2014-12	2015-12	2016-12
Revenue	65875	55656	55184	47011	38537
Cost of revenue	47055	40727	39767	33742	28309
Gross profit	18820	14929	15417	13269	10228
Operating expenses
Research and development	2466	2046	2135	2165	1951
Sales, General and administrative	5919	5547	5697	5199	4686
Other operating expenses	1862	1708	2257	2649	3093
Total operating expenses	10247	9301	10089	10013	9730
Operating income	8573	5628	5328	3256	498
Interest Expense	467	465	484	507	505
Other income (expense)	130	-35	239	106	146
Income before taxes	8236	5128	5083	2855	139
Provision for income taxes	2528	1319	1380	742	192
Other income	14	-6	8		-6
Net income from continuing operations	5722	3803	3711	2113	-59
Other	-41	-14	-16	-11	-8
Net income	5681	3789	3695	2102	-67
Net income available to common shareholders	5681	3789	3695	2102	-67
Earnings per share
Basic	8.71	5.87	5.99	3.54	-0.11
Diluted	8.48	5.75	5.88	3.5	-0.11
Weighted average shares outstanding
Basic	653	645	617	594	584
Diluted	670	659	629	601	584
EBITDA	12313	9407	9354	6995	4274
Dividends Paid					1800
Net operating working capital
	NOWC =	Operating current assets	-	Operating current liabilities
2016	NOWC =		-
2016	NOWC =
	NOWC =	Operating current assets	-	Operating current liabilities
2015	NOWC =		-
2015	NOWC =
Total net operating capital
	TOC =	NOWC	+	Net Fixed assets
2016	TOC =		+
2016	TOC =
	TOC =	NOWC	+	Net Fixed assets
2015	TOC =		+
2015	TOC =
Investment in total net operating capital
	Inv. In TOC =	TOC	-	TOC
2016	Inv. In TOC =		-
2016	Inv. In TOC =
Net operating profit after taxes
	NOPAT =	EBIT	x	( 1 - T )
2016	NOPAT =		x
2016	NOPAT =
Free cash flow
	FCF =	NOPAT	-	Net investment in operating capital
2016	FCF =		-
2016	FCF =
Uses of FCF
after tax interest= interest*(1-Tax rate)			*		=
Change in LT Debt and Notes Payable			-		=
Dividends Paid					=
Change in Common Stock (incl additional paid in stock and treasury Stock) and preferred stock			-		=
Change in Short term investments			-		=
Total Use

Calculate MVA in 2016 and 2015 for both companies. Did Nikes management create or destroy value for Nike between 2015 and 2016? Explain your answer. Did Caterpillars management create or destroy value for Caterpillar between 2015 and 2016? Explain your answer. (20 points per company)

Data Source is Morningstar.

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