Balance sheet ($mil) 2008 Assets Current assets Cash and marketable securities Accounts receivable Inventories Other

current assets Total current assets Fixed assets Tangible fixed assets property plant and equipment Less accumulated depreciation Net tangible fixed assets Long -term investments Other long-term assets Total assets 2007

661 166 8,209 215 9,251

530 247 7,611 298 8,686

31,477 8,755 22,722 253 460 32,686

28,836 7,475 21,361 509 313 30,869

Balance sheet ($ mil) 2008 Liabilities and Shareholders Equity Current liabilities Debt due for repayment Accounts payable Other current liabilities Total current liabilities Long-term debt Deferred income taxes Other long-term liabilities Total liabilities Common stock and other paid-in capital Retained earnings and capital surplus Total shareholders' equity Total liabilities and shareholders equity 2007

1,021 4,543 2,458 8,022 5,039 660 910 14,631 735 17,320 18,055 32,686

1,104 4,137 2,510 7,751 5,576 670 774 14,771 729 15,369 16,098 30,869

Income ($ mil) Net sales Cost of goods sold Selling, general, and administrative expenses Depreciation Earnings before interest and taxes (EBIT) Interest expense Taxable income Tax Net income Dividends Addition to retained earnings 2008 48,230 31,729 11,158 1,539 3,804 298 3,506 1,311 2,195 491 1,704

Market - to - book ratio

market val ue of equity book value of equity $26,739 $18,055 1.5


Market Capitaliza tion (# shares) (price per share)

MVA Market Capitaliza tion - Equity

Book Value

Market Value Added Exxon Mobil Wal-Mart Coca Cola Google Johnson & Johnson Source: EVA Dimensions $154,397 128,159 106,957 96,880 67,645

Market-toBook-Ratio 1.69 2.02 3.46 6.82 1.8 Fedex J.C. Penney Xerox Dow Chemical AT&T

Market Value Added ($1,538) -3,777 -9,981 -17,823 -49,052

Market-toBook-Ratio 0.96 0.69 0.37 0.55 0.85


EVA Residual Income After Tax interest Net Income - Cost of Capital Capital

EVA

After Tax interest Net Income Total Capital

Cost of Capital - Total Capital

EVA

After Tax interest Net Income Total Capital

Cost of Capital - Total Capital

EVA

(1 - .35) 298 2,195 .074 - 21,674 21,674 $785mil

after tax interest net income Return on capital = average total capital 1 - .35 298 2,195 = .107 21,674 23,094 /2

net income Return on equity = equity

2,195 16,098

.136

after tax interest net income Return on assets = total assets 1 - .35 298 2,195 = .077 30,869

Asset turn over ratio

Sales total assets at start of year

Asset turn over ratio

Sales Average total assets

Asset turn over ratio

Sales total assets at start of year

48,230 30,869

1.56

Asset turn over ratio

Sales Average total assets

48,230 (30,869 32,686) / 2

1.52

Inventory turnover ratio =

cost of goods sold inventory at start of year

Average Days in Inventory = inventory at start of year cost of goods sold/365

Receivable s Turnover =

sales receivable s at start of year

receivable s at start of year average daily sales

Average collection period =

Net Income Profit Margin = sales After tax interest Net Income Operating Profit Margin = sales

Net Income interest ROA = assets

sales Net Income interest ROA = x assets sales

Sales Admiral Motors Diana Corporation Diana Motors (the merged firm) $20 8 20

Profits $4 2 6

Assets $40 20 60

Asset Turnover 0.5 0.4 0.33

Profit Margin 20% 25 30

ROA 10% 10 10

long term debt Long term debt ratio = long term debt + equity

long term debt Debt equity ratio = equity

ROE =

assets sales Net Income interest Net Income x x x equity assets sales Net Income interest

Net working capital to total assets ratio

Net working capital = Total assets

current assets Current ratio = current liabilities