Q9. MicrоDrive Inc. December 31 Bаlаnce Sheets (in milliоns оf dollаrs) 2024 2023 Assets Cash $10 $15 Short-term investments $0 $65 Accounts receivable $375 $315 Inventories $615 $415 Total current assets $1,000 $810 Net plant and equipment (Net FA) $1,000 $870 Total assets $2,000 $1,680 Liabilities and equity Accounts payable $60 $30 Notes payable $110 $60 Accruals $140 $130 Total current liabilities $310 $220 Long-term bonds $754 $580 Total liabilities $1,064 $800 Preferred stock (400,000 shares) $40 $40 Common stock (50,000,000 shares) $130 $130 Retained earnings $766 $710 Total common equity $896 $840 Total liabilities and equity $2,000 $1,680 MicroDrive Income Statements for Years Ending December 31 (in millions of dollars) 2024 2023 INCOME STATEMENT Net sales $3,000.0 $2,850.0 Operating costs except depreciation $2,616.2 $2,497.0 EBITDA $383.8 $353.0 Depreciation and amortization $100.0 $90.0 Earnings before interest and taxes (EBIT) $283.8 $263.0 Less interest $88.0 $60.0 Earnings before taxes (EBT) $195.8 $203.0 Taxes (t=40%) $78.3 $81.2 Net Income before preferred dividends $117.5 $121.8 Preferred dividends $4.0 $4.0 Net Income available to common stockholders $113.5 $117.8 Common dividends $57.5 $53.0 Addition to retained earnings $56.0 $64.8 Calculate MicroDive’s net operating working capital (NOWC) for Year 2013 and 2014. Calculate MicroDive’s net operating working capital (NOWC), total net operating capital (TOC), net operating profit after taxes (NOPAT), and free cash flow (FCF) for Year 2014.
Q6. Yоu hаve been given the аttаched infоrmatiоn on the ABC Company. ABC expects sales to grow by 30 percent in 2019 and operating costs should increase in proportion to sales. Fixed assets were being operated at 90 percent of capacity in 2018, but all other assets were used to full capacity. Underutilized fixed assets cannot be sold. Current assets and spontaneous liabilities should increase in proportion to sales during 2019. The company plans to finance any external funds needed as 40 percent notes payable and 60 percent long-term debt. The interest rate is 8 percent and you can assume that interest expenses will be paid at the beginning of the year. That is, interest expenses for 2019 will be based on the amount of debt at the end of 2018. The dividend payout ratio (50%) will remain constant. Calculate the projected 2019 addition to R.E. (retained earnings). Information on the ABC Company: Year 2018 Sales $1,000.00 Operating costs 800.00 EBIT $ 200.00 Interest 15.00 EBT $ 185.00 Taxes (40%) 74.00 Net Income $ 111.00 Dividends (50%) 55.50 Add'n to R.E. $ 55.50 December 31, 2018 Current Assets $ 700.00 Net fixed Assets 300.00 Total assets $1,000.00 A/P and Accruals $ 150.00 N/P 100.00 Long term debt 100.00 Common stock 150.00 Retained earnings 500.00 Total Liab & Equity $1,000.00