3. The following data applies to GoodCorp. (in millions of US $):

·         Cash & marketable securities                     $315

·         Fixed assets                                               $546

·         Net sales                                                    $2520

· Earnings Before Interests and Taxes (EBIT) $273

· Net Earnings After Taxes (NEAT ) $126

·         Quick Ratio ((CA-Inventory)/CL)                  2.1 to 1

·         Current Ratio (CA/CL)                                 3.4 to 1

· Average Collection Period (ACP) 45.6 days

· Return on Equity (ROE, NEAT/Net Common Equity) 13%

·         Tax rate                                                      25%

On the Liabilities & Equity side, GoodCorp has only common equity, debt and current operating liabilities.

a.     Find GoodCorp' (1) Accounts Receivables, (2) Current Operating Liabilities, (3) Current Assets, (4) Total Assets, (5) Net Common Equity, and (7) Debt. (10 points)

b.    If GoodCorp managed to reduce its ACP by 15.60 days (to 30 days) while holding other things constant, how much cash could it generate? (10 points).

c.     What is GoodCorp ROIC (post-tax) ? (10 points)

Answer rating: 100% (QA)

a 1 Accounts Receivables Average Collection Period ACP 456 days Accounts Receivables Net Sales 365 A... View the full answer