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Browning - Ch02 P15 Build A Model
Browning - Ch02 P15 Build A Model
Browning - Ch02 P15 Build A Model
Chapter: 2
Problem: 15
a. Using the financial statements shown below, calculate net operating working capital, total net
operating capital, net operating profit after taxes, free cash flow, and return on invested capital for
the most recent year.
Lan & Chen Technologies: Income Statements for Year Ending December 31
(Thousands of Dollars) 2016 2015
Sales $945,000 $900,000
Expenses excluding depreciation and amortization 812,700 774,000
EBITDA $132,300 $126,000
Depreciation and amortization 33,100 31,500
EBIT $99,200 $94,500
Interest Expense 10,470 8,600
EBT $88,730 $85,900
Taxes (40%) 35,492 34,360
Net income $53,238 $51,540
Operating Operating
2015 NOWC = current assets - current liabilities
2015 NOWC = $450,000 - $135,000
2015 NOWC = $315,000
b. Assume that there were 15 million shares outstanding at the end of the year, the year-end closing
stock price was $65 per share, and the after-tax cost of capital was 8%. Calculate EVA and MVA for
the most recent year.