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Calculate watervans economic value added

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Reference no: EM132475657

Here are simplified financial statements for Watervan Corporation:

INCOME STATEMENT(Figures in $ millions)Net sales                          $883.00

Cost of goods sold                                                                      743.00

Depreciation                                                                                33.00

Earnings before interest and taxes (EBIT)                                       $107.00

Interest expense                                                                        14.00

Income before tax                                                                      $93.00

Taxes                                                                                        19.53

Net income                                                                                 $73.47

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

Assets Current assets                                            $371                       $316

Long-term assets                                                   262                           224

Total assets                                                        $633                           $540

Liabilities and shareholders' equity Current liabilities       $196                         $159

Long-term debt                                                        110                          123

Shareholders' equity                                                 327                          258

Total liabilities and shareholders' equity                         $633                        $540

The company's cost of capital is 8.5%.

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

Quetsion 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.)

Quetsion 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.)

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

Reference no: EM132475657

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