Free Cash Flow Arlington Corporation\'s financial statements (dollars and shares

Question

Free Cash Flow Arlington Corporation's financial statements (dollars and shares are in millions) are provided here Balance Sheets as of December 31 2016 2015 Assets $ 15,000 35,000 30,975 $80,975 50,000 $130,975 $ 13,000 30,000 28,000 $ 71,000 48,000 $119,000 Cash and equivalents Accounts receivable Inventories Total current assets Net plant and equipment Total assets Liabilities and Equity Accounts payable Notes payable Accruals $ 10,100 6,500 7,000 $ 23,600 20,000 $9,000 5,450 5,000 $ 19,450 20,000 Total current liabilities Long-term bonds

Explanation / Answer

EVA refers to difference between net operating income and return on capital emlopyed

Step:1 net operating income

NET INCOME=$22,230

ADD:interest net of tax=$4770

Net operating income=$ 27000

Step2:capital employed

Share holders fund=$87375

Debt. =$20000

Total = $107375

Step3:EVA =27000-10738(107375*10%)

EVA=$16,262

e)market value added (MVA) refers to total value of enquiry and long term debt minus total capital employed by boshareholders and long term debt holder

Here long term bond value is same

Then, MVA =CURRENT market value of equity -share holders fund

=100000(25*4000)-87375

MVA=$ 12,625

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