1 answer

Cusic Industries had the following operating results for last year; sales = $25,700; cost of goods...

Question:

  1. Cusic Industries had the following operating results for last year; sales = $25,700; cost of goods sold = $18,400; depreciation expense = $3,450; interest expense = $790. At the beginning of last year, net fixed assets were $19,280, current assets were $5,100, and current liabilities were $3,400. At the end of last year, net fixed assets were $21,650, current assets were $5,830 and current liabilities were $3,580. The tax rate for last year was 40%. Assume there is no short term investments and notes payable.

a. Construct the Income Statement for Cusic Industries. What was net income for last year?

b. What was NOPAT for last year? What caused the difference between net income and NOPAT?

c. What was Return on Invested Capital?

d.   What was the free cash flow for last year? Is this possible? Explain.

Please show all the work in Excel


Answers

a] Sales $            25,700
-Cost of goods sold $            18,400
-Depreciation $              3,450
=EBIT $              3,850
-Interest $ 790
=EBT $              3,060
-Tax at 40% $              1,224
=NI $              1,836
b] NOPAT = EBIT*(1-t) = 3850*(1-40%) = $              2,310
The difference is the after tax interest
expense. It is 790*(1-40%) = $ 474
c] Invested capital = Current assets+Net fixed assets-Current liabilities = 5100+19280-3400 = $            20,980
ROIC = NOPAT/Invested capital = 2310/20980 = 11.01%
d] FCF = OCF-Capital expenditure-Changes in NWC
OCF = EBIT*(1-t)+Depreciation = 3850*(1-40%)+3450 = $              5,760
Capital expenditure = Ending NFA-Beginning NFA+Depreciation = 21650-19280+3450 = $              5,820
Changes in NWC = Ending NWC-Beginning NWC = (5830-3580)-(5100-3400) = $ 550
FCF = 5760-5820-550 = $                -610
Negative FCF is possible as the expenditure in FA
and the increase in NWC put together can be more
than OCF.
.

Similar Solved Questions

1 answer
Number 17 please help 17. Take the Balance Sheets and Income statements of Mlimani Bank Limited...
number 17 please help 17. Take the Balance Sheets and Income statements of Mlimani Bank Limited for three years as shown below, for each year compute: A. ROE B. ROA C. Asset Utilization D. Equity Multiplier E. Net interest margin F. Security gain to Asset G. Taxes to Assets H. Net Non-Interest Ex...
1 answer
Why am I getting compile errors. rowPuzzle.java:9: error: class, interface, or enum expected public static boolean...
Why am I getting compile errors. rowPuzzle.java:9: error: class, interface, or enum expected public static boolean rowPuzzle(ArrayList<Integer> squares, int index, ArrayList<Boolean> visited) ^ rowPuzzle.java:16: error: class, interface, or enum expected } //Java Program import java.util...
1 answer
The inclined-tube manometer shown has D = 110 mm and d = 8.0 mm. (a) Determine...
The inclined-tube manometer shown has D = 110 mm and d = 8.0 mm. (a) Determine the angle, θ, required to provide a 5 : 1 increase in liquid deflection, L, compared with the total deflection in a regular U-tube manometer. (b) Evaluate the sensitivity of this inclined-tube manometer. Assume that...
1 answer
On December 31, 2017, Berclair Inc. had 500 million shares of common stock and 22 million...
On December 31, 2017, Berclair Inc. had 500 million shares of common stock and 22 million shares of 9%, $100 par value cumulative preferred stock issued and outstanding. On March 1, 2018, Berclair purchased 30 million shares of its common stock as treasury stock. Berclair issued a 4% common stock di...
1 answer
Question 35 O pts What is the role of dendritic cells in the transition between innate...
Question 35 O pts What is the role of dendritic cells in the transition between innate and adaptive immunity? Explain. (This is also a 15-point question) . x x...
1 answer
Homework: 7.2 Score: 0 of 1 pt 7.2.35 14 of 14 (0 complete) HW Score: 0%,...
Homework: 7.2 Score: 0 of 1 pt 7.2.35 14 of 14 (0 complete) HW Score: 0%, 0 of 14 pts Question Help caffeine content per 12-ounce bottle of cola is 35 milligrams You want to test this claim Duning your tests, you of thirty 12-ounce botties of cola has a mean caffeine content of 32.9 milligrams with ...
1 answer
Grouse Corporation, a calendar year C corporation, had taxable income of $1,400,000, $1,200,000, and $700,000 for...
Grouse Corporation, a calendar year C corporation, had taxable income of $1,400,000, $1,200,000, and $700,000 for 2017, 2018, and 2019, respectively. Grouse has taxable income of $1,600,000 for 2020. What are Grouse Corporation's minimum required estimated tax payments for 2020? April 15, 2020: ...
1 answer
How many original amendments to the Constitution were added and ratified by 1791?
How many original amendments to the Constitution were added and ratified by 1791?...
1 answer
Question 7 1 pts the volume of the When an object is floating in water, it...
Question 7 1 pts the volume of the When an object is floating in water, it displaces a volume of water object. greater than less than equal to Question 8 1 pts When an object floats on water, it displaces a mass of water larger than the mass of the object. True False Question 9 1 pts If the density ...
1 answer
A 1-in, constant diameter shaft is loaded with forces at A and B as shown, with...
A 1-in, constant diameter shaft is loaded with forces at A and B as shown, with ground reaction forces at O and C. The shaft also transmits a torque of 1500 lbf in throughout the length of the shaft. The shaft has a tensile yield strength of 130 kpsi. 460 lbf 575 lbf -12 in 18 in 1500 lbf-in А...
1 answer
A highway construction company is under contract to build a new roadway through a scenic area...
A highway construction company is under contract to build a new roadway through a scenic area and two rural towns in Colorado. The road is expected to cost $10,000,000, with annual upkeep estimated at $150,000 per year. Additional income from tourist (Benefits) of $900,000 per year is estimated. The...
1 answer
What is the definition of personal health and wellness?
what is the definition of personal health and wellness?...
1 answer
Homework 7 - Phys-237, section X 7 C w ebassign.net/web/Student/Assignment Responses/last?dep=22498526 Be Blackboard Learn E MARS...
homework 7 - Phys-237, section X 7 C w ebassign.net/web/Student/Assignment Responses/last?dep=22498526 Be Blackboard Learn E MARS Login Mid Atlantic Financ... Apps TU5 mys Need Help? Read it Talk to Tutor 6. + -12 points SerCP8 5.P.011. My Notes + Ask A 5.70-kg object is initially moving so that its...
1 answer
Please Show Your Work. Calculate return for each of the six option contracts using (Pt –...
Please Show Your Work. Calculate return for each of the six option contracts using (Pt – Pt-1)/P(t) where t denotes the lagged price by 1 period. APPL PrevClose Open Bid Ask Strike Vol Open Int IV 1 ITM call AAPL190118C00134000      ...
1 answer
Which of the following statements is true? i fixed the question a. Both ionization energy and...
Which of the following statements is true? i fixed the question a. Both ionization energy and electron affinity increase as you move across a row of the periodic table. b. Both metallic character and electron affinity increase as you move across a row of the periodic table. c. Ionization energy incr...
1 answer
Assume the random variable X has a binomial distribution with the given probability of obtaining a...
Assume the random variable X has a binomial distribution with the given probability of obtaining a success. Find the following probability, given the number of trials and the probability of obtaining a success. Round your answer to four decimal places. P(X≥7), n=8, p=0.5....