Reference no: EM132820071

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

Income Statement

Particulars	Amount
Sales	330,000,000.00
Total Expenses	(273,900,000.00)
Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)	56,100,000.00
Depreciation	(7,399,150.00)
Interest Expense	(2,000,000.00)
Earnings Before Income Tax	46,700,850.00
Income Tax (35% of Earnings Before Income Tax)	(16,345,297.50)
Net Income	30,355,552.50

Required -

1. Prepare the capital statement for the period ended December 31, 2019.

2. 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.

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

4. 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.