Two companies with different economic-value-added (EVA) profiles are Barton Oil Pipeline Incorporated and Crompton Bank Limited. Adapted versions of the two companies€™ financial statements are presented here (in millions):

Requirements
1. Before performing any calculations, which company do you think represents the better investment? Give your reason.
2. Compute the EVA for each company and then decide which company€™s stock you would rather hold as an investment. Assume both companies cost of capital is8.5%.

Transcribed Image Text:

Barton Oil Pipeline Inc. Crompton Bank Limited Balance sheet data: $ 4,338 1,257 Total assets $14,000 $ 13 2,605 Interest-bearing debt . Stockholders' equity. 406 Total liabilities and equity.333 $14,000 3,819 1,219 Income statement data: Total revenue Interest expense Net in $11,007 76 $ 180