Reference no: EM132482523

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%.

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?