Refer to the preceding problem for reported financial statement data for Astro, Inc. Required 1. Prepare, using

Question:

Refer to the preceding problem for reported financial statement data for Astro, Inc.

Required

1. Prepare, using the financing approach, an estimate of EVA ® NOPAT. In addition to the above data, you’ve discovered the following: increase during the year of the LIFO reserve, $2; imputed interest expense on noncapitalized leases, $4; and increase in deferred tax liability during the year, $5. What is the rationale for the various adjustments you made to the company’s reported income statement?

2. Prepare, using the financing approach, an estimate of EVA ® capital. In addition to the above information, you note the following: end-of-year value of the LIFO reserve, $10; and present value of noncapitalized leases, $50. What is the rationale for the adjustments you made to reported balance sheet amounts in order to estimate EVA ® capital?

3. Given the company’s WACC, what is the estimated EVA ® for the year? How do you interpret this figure?

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...