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  • FN 361 HW 2

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    This document contains information about the differences between market value and book value for a company, as well as calculations to determine the end of year net operating working capital for the company. It shows that the company has a market value of $22 million, which is higher than its book value of $17 million, resulting in a higher stockholders' equity under market value. It also shows the calculations to determine that the company's end of year net operating working capital is $294.8 million.

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    fn 361 hw 2

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    This document contains information about the differences between market value and book value for a company, as well as calculations to determine the end of year net operating working capital for the company. It shows that the company has a market value of $22 million, which is higher than its book value of $17 million, resulting in a higher stockholders' equity under market value. It also shows the calculations to determine that the company's end of year net operating working capital is $294.8 million.

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    1 views1 page

    FN 361 HW 2

    Uploaded by

    gremlin132
    This document contains information about the differences between market value and book value for a company, as well as calculations to determine the end of year net operating working capital for the company. It shows that the company has a market value of $22 million, which is higher than its book value of $17 million, resulting in a higher stockholders' equity under market value. It also shows the calculations to determine that the company's end of year net operating working capital is $294.8 million.

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    © All Rights Reserved
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    of 1

    Fn 361

    Ch 2-16
    Market value(MV) vs Book value(BV)
    BV
    A
    Current
    Fixed

    Total

    A=L+E

    NOTE all figures are in million(m)

    MV

    $5m
    $12m

    $17m

    $6m
    $16m

    $22m

    L+E
    Current
    Long term debt
    Stockholders
    equity
    Total

    BV

    MV

    $3m
    $7m

    $3m
    $7m

    $7m
    $17m

    $12m
    $22m

    For BV 5+12=17 and 3+7=10 so 17-10=7-stockholder equity


    For MV 6+16=22 and 3+7=10 so 22-10=12-stockholder equity

    Ch2-27
    End of year balance for Net operating working capital =?
    Opertaing cash Flow (OCF)= EBIT(1-tax rate) +Depreciation
    OCF=$494m(1-.30)+$197m=$542.8m
    Free cash flow (FCF)=OCF- Investment in Operating capital (IOC)
    $424m=$542.8-IOC IOC=$118.8m
    IOC=Change in fixed assets + change in Net operating working capital
    $118.8m=($1,803m-$1,562m)+(end of year Net operating capital-$417m)
    118.8-241+417=$294.8m
    End of year net operating capital =$294.8m

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