4/11/2010

Chapter 2. Solution for 2-15

a. Using the financial statements shown below, calculate net operating working capital, total net operating capital, net operating profit after taxes, free cash flow, and return on invested capital for the most recent year. Lan & Chen Technologies: Income Statements for Year Ending December 31 (Thousands of Dollars) 2010 Sales $945,000 Expenses excluding depreciation and amortization 812,700 EBITDA $132,300 Depreciation and amortization 33,100 EBIT $99,200 Interest Expense 10,470 EBT $88,730 Taxes (40%) 35,492 Net income $53,238 Common dividends Addition to retained earnings Lan & Chen Technologies: December 31 Balance Sheets (Thousands of Dollars) Assets Cash and cash equivalents Short-term investments Accounts Receivable Inventories Total current assets Net fixed assets Total assets Liabilities and equity Accounts payable Accruals Notes payable Total current liabilities Long-term debt Total liabilities Common stock Retained Earnings Total common equity Total liabilities and equity Key Input Data Tax rate Net operating working capital 2010 NOWC = Operating current assets Operating current liabilities $43,300 $9,938

2009 $900,000 774,000 $126,000 31,500 $94,500 8,600 $85,900 34,360 $51,540 $41,230 $10,310

2010 $47,250 3,800 283,500 141,750 $476,300 330,750 $807,050

2009 $45,000 3,600 270,000 135,000 $453,600 315,000 $768,600

$94,500 47,250 26,262 $168,012 94,500 $262,512 444,600 99,938 $544,538 $807,050

$90,000 45,000 9,000 $144,000 90,000 $234,000 444,600 90,000 $534,600 $768,600

40%

2010 2010

NOWC = NOWC =

$472,500 $330,750

$141,750

2009 2009 2009

NOWC = NOWC = NOWC =

Operating current assets $450,000 $315,000

Operating current liabilities $135,000

Total net operating capital 2010 TOC = 2010 TOC = 2010 TOC = 2009 2009 2009 TOC = TOC = TOC =

NOWC $330,750 $661,500 NOWC $315,000 $630,000

+ +

Fixed assets $330,750

+ +

Fixed assets $315,000

Investment in total net operating capital 2010 2010 Inv. In TOC = TOC 2010 Inv. In TOC = $661,500 2010 Inv. In TOC = $31,500 Net operating profit after taxes 2010 NOPAT = 2010 NOPAT = 2010 NOPAT = Free cash flow 2010 2010 2010

2009 TOC $630,000

EBIT $99,200 $59,520

x x

(1-T) 60%

FCF = FCF = FCF =

NOPAT $59,520 $28,020

Net investment in operating capital $31,500

Return on invested capital 2010 ROIC = 2010 ROIC = 2010 ROIC =

NOPAT $59,520 9.0%

/ /

Total net operating capital $661,500

b. Assume that there were 15 million shares outstanding at the end of the year, the year-end closing stock price was $65 per share, and the after-tax cost of capital was 8%. Calculate EVA and MVA for the most recent year. Additional Input Data Stock price per share # of shares (in thousands) After-tax cost of capital Market Value Added MVA = Stock price MVA = $65.00 MVA = MVA = $430,462

$65.00 15,000 8.0%

x x $975,000

# of shares 15,000

Total common equity $544,538 $544,538

Economic Value Added EVA = NOPAT EVA = $59,520 EVA = $59,520 EVA = $6,600

(Operating Capital $661,500

x x $52,920

After-tax cost of capital) 8%

a. Utilizando los estados financieros que se muestra a continuacin, calcular el capital de trabajo neto operativo, el capital total neto de operacin, la utilidad operativa neta despus de impuestos, flujo de caja libre (FCF), y el retorno sobre el capital invertido (ROIC) para el ao ms reciente. ECX Technologies: P & G Diciembre 31 (Miles de Dolares) Ventas CV excluyendo depreciacion y amortizacion EBITDA Depreciacion y amortizacion EBIT Gastos de Interes EBT Impuestos (40%) Utilidad Neta Dividendos (Accionistas Comunes) Utilidades Retenidas ECX Technologies: P & G Diciembre 31 (Miles de Dolares) Activos Efectivo y Equivalentes de efectivo Inversiones a corto plazo CxC Inventarios Total activos corrientes Activo Fijos Netos Total activo Pasivos y Patrimonio CxP Gastos devengados DxP Total pasivos corrientes Long-term debt Total pasivos Acciones comunes Utilidades Retenidas Total patrimonio comun Total Pasivo y Patrimonio Key Input Data Tasa Impuesto Net operating working capital (Capital de trabajo neto OPERATIVO) Operating current assets $472,500 $330,750 Operating current liabilities $141,750

2010 $945,000 812,700 $132,300 33,100 $99,200 10,470 $88,730 35,492 $53,238 $43,300 $9,938

2009 $900,000 774,000 $126,000 31,500 $94,500 8,600 $85,900 34,360 $51,540 $41,230 $10,310

2010 $47,250 3,800 283,500 141,750 $476,300 330,750 $807,050

2009 $45,000 3,600 270,000 135,000 $453,600 315,000 $768,600

$94,500 47,250 26,262 $168,012 94,500 $262,512 444,600 99,938 $544,538 $807,050

$90,000 45,000 9,000 $144,000 90,000 $234,000 444,600 90,000 $534,600 $768,600

40%

2010 2010 2010

NOWC = NOWC = NOWC =

2009 2009 2009

NOWC = NOWC = NOWC =

Operating $450,000 $315,000

Operating current $135,000

Total net operating capital (Total del Capital Operativo Neto) 2010 TOC = NOWC 2010 TOC = $330,750 2010 TOC = $661,500 2009 2009 2009 TOC = TOC = TOC = NOWC $315,000 $630,000

+ +

Fixed assets $330,750

+ +

Fixed assets $315,000

Investment in total net operating capital (Inversin total neta en capital operativo) 2010 2009 2010 Inv. In TOC = TOC TOC 2010 Inv. In TOC = $661,500 $630,000 2010 Inv. In TOC = $31,500 Net operating profit after taxes (Utilidad operativa neta despues de impuestos) 2010 NOPAT = EBIT x 2010 NOPAT = $99,200 x 2010 NOPAT = $59,520 Free cash flow (Flujo de cala libre) 2010 FCF = 2010 FCF = 2010 FCF =

(1-T) 60%

NOPAT $59,520 $28,020

Net investment in operating capital $31,500

Return on invested capital (ROIC= Retorno sobre el capital invertido) 2010 ROIC = NOPAT / 2010 ROIC = $59,520 / 2010 ROIC = 9.00%

Total net operating capital $661,500

b. Supongamos que hay 15 millones de acciones en circulacin al final del ao, el precio de cierre de fin de ao de las acciones fue de $ 65 por accin, y el costo despus de impuestos de capital fue del 8%. Calcular el EVA y MVA para el ao ms reciente. Additional Input Data Precio de las acciones por accion # de Acciones (en miles) Costo de capital despues de impuestos Market Value Added MVA = Stock price MVA = $65.00 MVA = MVA = $430,462 Economic Value Added EVA = NOPAT

$65.00 15,000 8.0%

x x $975,000

# of shares 15,000

Total common equity $544,538 $544,538

(Operating Capital)

(After-tax cost of capital)

EVA = EVA = EVA =

$59,520 $59,520 $6,600

$661,500

x $52,920

8%

jo neto operativo, el capital FCF), y el retorno sobre el

perating capital

de fin de ao de las l EVA y MVA para el ao

otal common equity

After-tax cost of capital)