Arlington Corporation\'s financial statements (dollars and shares are in million

Question

Arlington Corporation's financial statements (dollars and shares are in millions) are provided here.

Enter your answers in millions. For example, an answer of $25,000,000,000 should be entered as 25,000.

What was net operating working capital for 2015 and 2016?

What was Arlington's 2016 free cash flow?

$    million

Construct Arlington's 2016 statement of stockholders' equity.

What was Arlington's 2016 EVA? Assume that its after-tax cost of capital is 10%. Round your answer to two decimal places.

$    million

What was Arlington's MVA at year-end 2016? Assume that its stock price at December 31, 2016 was $25.

$    million

Balance Sheets as of December 31 2016 2015 Assets Cash and equivalents $  15,000 $  11,000 Accounts receivable 35,000 25,000 Inventories 31,285 24,000   Total current assets $ 81,285 $ 60,000 Net plant and equipment 47,000 45,000 Total assets $128,285 $105,000 Liabilities and Equity Accounts payable $ 10,100 $  9,500 Accruals 7,900 6,000 Notes payable 6,600 5,100   Total current liabilities $ 24,600 $ 20,600 Long-term bonds 15,000 15,000   Total liabilities $ 39,600 $ 35,600 Common stock (4,000 shares) 50,000 50,000 Retained earnings 38,685 19,400   Common equity $ 88,685 $ 69,400 Total liabilities and equity $128,285 $105,000

Explanation / Answer

i) Net Operating Working Capital : Operating Current Assets-operating Current Liability 2016 2015 Operating Current Assets: Cash & cash Equivalent+A/c Receivable+Inventories 81285 60000 (15000+35000+31285) (11000+25000+24000) Operating Current Liability: A/c Payable+Accruals+Notes Payable 24600 20600 (10100+7900+6600) (9500+6000+5100) 56685 39400 Millions Millions ii) Calculation of 2016 free cash flow 2016 EBIT(1-Tax rate) 26400 44000(1-40%) Add: Depreciation 6000 less: change in Working capital(Current yr WC-Pevious yr WC) 17285 (81285-24600)-(60000-20600) less: capital Expenditure 8000 (closing assets+Depreciation-opening Assets) (47000+6000-45000) 7115 Millions iii) Statement of stockholder's Equity Common Stock Retained Earnings Total Stake Holder's Equity Particulars Shares Amount Amount2 Amount3 Opening Balance (31/12/15) 4000 50000 19400.00 69400.00 2016 Net Income 22230.00 0.00 Cash Dividend 2945.00 0.00 Addition to Retained Earnings 25175.00 Closing Balance (31/12/2016) 4000 50000 44575 94575.00 iv) Calculation of EVA: ((Return on Operating Assets)-Weighted Average Cost of capital)*Operating Capital Caculation of Total and Operating Capital: Common Stock 50000 Retained Earnings 38685 Long Term Bonds 15000 103685 Calculation of ROOA: EBIT(1-tax)/Operaring Capital (44000)*(1-40%)/103685 25.46% EVA; (25.46%-10%)*103685                         16,029.70 v) Calculation Of MVA: Market Value of Stocks-Book Value of Stocks Market Value of Stocks(4000*25) 100000 Less: Bv Of Stocks (Share Capital + Retained Earnings) 88685 11315

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