Calculate the economic value added

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Reference no: EM132848497

Question - Financial statements - The balance sheets at the end of 2018 and 2019 of Kairos Industries are shown below:

A. Financial statements, cash flow and taxes

 

2019

2018

Cash

$102,950

$89,825

Accounts receivable

103,465

85,627

Inventories

38,544

35,082

Total currents assets

244,959

210,534

Property, plant and equipment

67,265

42,536

Total assets

312,224

253,070

Debts to pay

30,861

23,209

Accumulations

30,577

22,756

Obligations to pay

16,817

14,317

Total current liabilities

78,255

60,282

Long term debts

76,364

64,014

Total liabilities

154,619

124,296

Common actions

100,000

90,100

Retained earnings

57,605

38,874

Total equity

157,605

128,974

Total liabilities plus equity

$312,224

$253,270

Required -

1. Taking into consideration that Kairos Industries does not have any surplus cash available, determine the available cash flow (Free Cash Flow) and the operating working capital.

2. Explain the effect it would have on the taxes paid by shareholders and the company if Kairos Industries increased its dividend rate.

3. Calculate the economic value added (EVA) and the market value added (MVA) in 2019, considering that the cost of capital after tax is 12% and the price of shares of Kairos Industries is $ 20 with 9 million of outstanding shares.

Reference no: EM132848497

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