Reference no: EM132525337

INCOME STATEMENT(Figures in $ millions)

Net sales                                               $884.00

Cost of goods sold                                     744.00

Depreciation                                               34.00

Earnings before interest and taxes (EBIT)      $106.00

Interest expense                                          15.00

Income before tax                                      $91.00

Taxes                                                         19.11

Net income                                                $71.89

BALANCE SHEET(Figures in $ millions)    End of Year            Start of Year

Assets

Current assets                                              $372                 $318

Long-term assets                                            264                  225

Total assets                                                   $636                $543

Liabilities and shareholders' equity Current liabilities  $197              $160

Long-term debt                                                   111             124

Shareholders' equity                                             328              259

Total liabilities and shareholders' equity                   $636            $543

• The company's cost of capital is 8.5%.

Question a. Calculate Watervan's economic value added (EVA). (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.)

Question b. What is the company's return on capital? (Use start-of-year rather than average capital.) (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

Question c. What is its return on equity? (Use start-of-year rather than average equity.) (Enter your answer as a percent rounded to 2 decimal places.)

Question d. Is the company creating value for its shareholders?