Financial Statements, Cash Flow and Taxes

1. Last year, Pikachu I Choose You Company had Php 5 million in operating income. The company had a net
depreciation expense of Php 1 million and interest expense of Php 1 million; its corporate tax rate was 40 percent.
The company has Php 14 million in current assets and Php 4 million in non-interest bearing current liabilities; it has
Php 15 million in net plant and equipment. It estimates that it has an after-tax cost of capital of 10 percent.
Assume that Pikachu’s only noncash item was depreciation. Solve for the following:
a. Net income
b. Net cash flow
c. NOPAT
d. Operating cash flow
e. If the operating capital in the previous year was Php 24 million, solve the FCF for the year?
f. EVA

2. Bulbasaur Corp recently reported net income of Php 3 million. Its operating income was Php 6 million, and the
company pays 40 percent tax rate. What was the company’s interest expense for the year?

3. In its most recent financial statements, Charmander reported Php 50 million of net income and Php 810 million
of retained earnings. The previous year, its balance sheet showed Php 780 million of retained earnings. What were
the total dividends paid to shareholders during the most recent year?

4. Squirtle recently reported an EBITDA of Php 7.5 million and Php 1.8 million of net income. The company has Php
2.0 million of interest expense and the corporate tax rate is 40 percent. What was the company’s depreciation and
amortization expense?

MIAW