Reference no: EM132526200
Locust Farming Balance Sheet ($ in millions)
Current assets $42,544 Current liabilities $29,735
Long-term assets 46,872 Long-term debt 27,772
Other liabilities 14,357
Equity 17,552
Total $89,416 Total $89,416
Locust has 665 million shares outstanding with a market price of $103 a share.
Question a. Calculate the company's market value added. (Enter your answers in millions.)
Question b. How much value as the company created for its shareholders as a percent of shareholders' equity, that is, the net capital contributed to the firm by its shareholders? (Enter your answer as a percentage rounded to the nearest whole number.)
INCOME STATEMENT(Figures in $ millions)
Net sales $898.00
Cost of goods sold 758.00
Depreciation 48.00
Earnings before interest and taxes (EBIT) $ 92.00
Interest expense 29.00
Income before tax $ 63.00
Taxes 13.23
Net income $49.77
BALANCE SHEET (Figures in $ millions)
End of Year Start of Year
Assets
Current assets $ 386 $ 346
Long-term assets 292 239
Total assets $ 678 $ 585
Liabilities and shareholders' equity
Current liabilities $ 211 $ 174
Long-term debt 125 138
Shareholders' equity 342 273
Total liabilities and shareholders' equity $ 678 $ 585
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.
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