Question

Here are simplified financial statements for Watervan Corporation: INCOME STATEMENT (Figures in $ millions) Net sales...

Here are simplified financial statements for Watervan Corporation:

INCOME STATEMENT
(Figures in $ millions)
Net sales $

899.00

Cost of goods sold

759.00

Depreciation

49.00

Earnings before interest and taxes (EBIT) $

91.00

Interest expense

30.00

Income before tax $

61.00

Taxes

21.35

Net income $

39.65

BALANCE SHEET
(Figures in $ millions)
End of Year Start of Year
Assets
Current assets $

387

$

348

Long-term assets

294

240

Total assets $

681

$

588

Liabilities and shareholders’ equity
Current liabilities $

212

$

175

Long-term debt

126

139

Shareholders’ equity

343

274

Total liabilities and shareholders’ equity $

681

$

588

The company’s cost of capital is 9%.

a. Calculate Watervan’s economic value added (EVA). (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.)

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.)

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.)

d. Is the company creating value for its shareholders?

  • Yes

  • No

rev: 09_22_2017_QC_CS-101846, 10_31_2017_QC_CS

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Here are simplified financial statements for Watervan Corporation: INCOME STATEMENT (Figures in $ millions) Net sales...
Here are simplified financial statements for Watervan Corporation: INCOME STATEMENT (Figures in $ millions) Net sales $ 885.00 Cost of goods sold 745.00 Depreciation 35.00 Earnings before interest and taxes (EBIT) $ 105.00 Interest expense 16.00 Income before tax $ 89.00 Taxes 31.15 Net income $ 57.85 BALANCE SHEET (Figures in $ millions) End of Year Start of Year Assets Current assets $ 373 $ 320 Long-term assets 266 226 Total assets $ 639 $ 546 Liabilities and shareholders’ equity...
Here are simplified financial statements for Watervan Corporation: INCOME STATEMENT (Figures in $ millions) Net sales...
Here are simplified financial statements for Watervan Corporation: INCOME STATEMENT (Figures in $ millions) Net sales $ 888.00 Cost of goods sold 748.00 Depreciation 38.00 Earnings before interest and taxes (EBIT) $ 102.00 Interest expense 19.00 Income before tax $ 83.00 Taxes 17.43 Net income $ 65.57 BALANCE SHEET (Figures in $ millions) End of Year Start of Year Assets Current assets $ 376 $ 326 Long-term assets 272 229 Total assets $ 648 $ 555 Liabilities and shareholders’ equity...
Here are simplified financial statements for Watervan Corporation: INCOME STATEMENT (Figures in $ millions) Net sales...
Here are simplified financial statements for Watervan Corporation: INCOME STATEMENT (Figures in $ millions) Net sales $ 890.00 Cost of goods sold 750.00 Depreciation 40.00 Earnings before interest and taxes (EBIT) $ 100.00 Interest expense 21.00 Income before tax $ 79.00 Taxes 16.59 Net income $ 62.41 BALANCE SHEET (Figures in $ millions) End of Year Start of Year Assets Current assets $ 378 $ 330 Long-term assets 276 231 Total assets $ 654 $ 561 Liabilities and shareholders’ equity...
Here are simplified financial statements for Watervan Corporation: INCOME STATEMENT (Figures in $ millions) Net sales...
Here are simplified financial statements for Watervan Corporation: INCOME STATEMENT (Figures in $ millions) Net sales $ 889.00 Cost of goods sold 749.00 Depreciation 39.00 Earnings before interest and taxes (EBIT) $ 101.00 Interest expense 20.00 Income before tax $ 81.00 Taxes 17.01 Net income $ 63.99 BALANCE SHEET (Figures in $ millions) End of Year Start of Year Assets Current assets $ 377 $ 328 Long-term assets 274 230 Total assets $ 651 $ 558 Liabilities and shareholders’ equity...
Here are simplified financial statements for Watervan Corporation: INCOME STATEMENT (Figures in $ millions) Net sales...
Here are simplified financial statements for Watervan Corporation: INCOME STATEMENT (Figures in $ millions) Net sales $ 901.00 Cost of goods sold 761.00 Depreciation 51.00 Earnings before interest and taxes (EBIT) $ 89.00 Interest expense 32.00 Income before tax $ 57.00 Taxes 11.97 Net income $ 45.03 BALANCE SHEET (Figures in $ millions) End of Year Start of Year Assets Current assets $ 389 $ 352 Long-term assets 298 242 Total assets $ 687 $ 594 Liabilities and shareholders’ equity...
Here are simplified financial statements for Watervan Corporation: INCOME STATEMENT (Figures in $ millions) Net sales...
Here are simplified financial statements for Watervan Corporation: INCOME STATEMENT (Figures in $ millions) Net sales $ 900.00 Cost of goods sold 760.00 Depreciation 50.00 Earnings before interest and taxes (EBIT) $ 90.00 Interest expense 31.00 Income before tax $ 59.00 Taxes 12.39 Net income $ 46.61 BALANCE SHEET (Figures in $ millions) End of Year Start of Year Assets Current assets $ 388 $ 350 Long-term assets 296 241 Total assets $ 684 $ 591 Liabilities and shareholders’ equity...
Problem 4-3 Measuring Performance (LO2) Here are simplified financial statements for Watervan Corporation: INCOME STATEMENT (Figures...
Problem 4-3 Measuring Performance (LO2) Here are simplified financial statements for Watervan Corporation: INCOME STATEMENT (Figures in $ millions) Net sales $ 890.00 Cost of goods sold 750.00 Depreciation 40.00 Earnings before interest and taxes (EBIT) $ 100.00 Interest expense 21.00 Income before tax $ 79.00 Taxes 27.65 Net income $ 51.35 BALANCE SHEET (Figures in $ millions) End of Year Start of Year Assets Current assets $ 378 $ 330 Long-term assets 276 231 Total assets $ 654 $...
Here are simplified financial statements of Phone Corporation from a recent year: INCOME STATEMENT (Figures in...
Here are simplified financial statements of Phone Corporation from a recent year: INCOME STATEMENT (Figures in millions of dollars)   Net sales 12,400   Cost of goods sold 3,660   Other expenses 4,137   Depreciation 2,278   Earnings before interest and taxes (EBIT) 2,325   Interest expense 645   Income before tax 1,680   Taxes (at 30%) 504   Net income 1,176   Dividends 796 BALANCE SHEET (Figures in millions of dollars) End of Year Start of Year   Assets      Cash and marketable securities 81        150             Receivables 1,982       ...
Here are simplified financial statements of Phone Corporation from a recent year: INCOME STATEMENT (Figures in...
Here are simplified financial statements of Phone Corporation from a recent year: INCOME STATEMENT (Figures in millions of dollars)   Net sales 13,900   Cost of goods sold 4,460   Other expenses 4,197   Depreciation 2,758   Earnings before interest and taxes (EBIT) 2,485   Interest expense 725   Income before tax 1,760   Taxes (at 30%) 528   Net income 1,232   Dividends 936 BALANCE SHEET (Figures in millions of dollars) End of Year Start of Year   Assets      Cash and marketable securities 97        166             Receivables 2,782       ...
Rome Deposit, Inc. has the following balance sheet and income statement. Income Statement ($ millions) Balance...
Rome Deposit, Inc. has the following balance sheet and income statement. Income Statement ($ millions) Balance Sheet ($ millions) Net sales $ 5,800.00 Assets Expenses 2,700.00 Current assets $ 6,000.00 Depreciation 1,150.00 Net fixed assets 8,700.00 Taxable income $ 1,950.00 Total assets $ 14,700.00 Interest expense 970.00 Taxable income $ 980.00 Liabilities & Owner's Equity Taxes (35%) 343.00 Current liabilities $ 1,200.00 Net income $ 637.00 Long-term debt 5,400.00 Owner's equity 8,100.00 Total liabilities and equity $ 14,700.00 a. What...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT