The following income statements and other information are available for the Schn

Question

The following income statements and other information are available for the Schneider Company:

Calculate EVA for 2014. Assume that for purposes of calculating EVA, the company capitalizes research and development expenditures and amortizes them over three years, including the year they are incurred. For external reporting purposes, research and development is expensed in the year incurred, as indicated in the income statements above. (Round answer to the nearest whole dollar, e.g. 5,725.)

2014 2013 2012 Sales $386,600,000 $245,000,000 $184,700,000 Less cost of goods sold 212,630,000 117,600,000 88,656,000 Gross margin 173,970,000 127,400,000 96,044,000 Less:       Selling and administrative costs 27,062,000 24,500,000 18,470,000       Research and development 15,464,000 12,250,000 9,235,000 Income from operations 131,444,000 90,650,000 68,339,000 Less taxes on income 39,433,200 27,195,000 20,501,700 Net income $92,010,800 $63,455,000 $47,837,300 Total assets $710,100,000 $664,900,000 $430,600,000 Noninterest-bearing current liabilities 144,900,000 11,050,000 98,690,000 Cost of capital 12% 12% 12%

Explanation / Answer

Years Details                   2,014                 2,013                   2,012 Total Income from Operations      131,444,000      90,650,000        68,339,000 Tax on Income         39,433,200      27,195,000        20,501,700 Tax Rate   30% 30% 30% Income from Operations      131,444,000      90,650,000        68,339,000 Less R & D Cost         15,464,000      12,250,000           9,325,000      37,039,000 Adjusted Net Operating Income        146,908,000    102,900,000        77,664,000 Amortization of R & D           12,346,333        7,191,667           3,108,333 Net R & D cost Addition to Assets in 2014         14,392,667 Total Assets as given      710,100,000 a Adjusted Total Assets        724,492,667 b NIBCL      144,900,000 Net Invested Capital=a-b      579,592,667 Cost of Capital = 12% $ cost of Net Invested Capital =         69,551,120 Adjusted Net Operating Income        146,908,000 NOPAT = Net Operating Income*(1-Tax rate )= 146908000*(1-30%)=      102,835,600 EVA =NOPAT - $ cost of Invested capital= =102835600-69551120= $    33,284,480

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