Laiho Industries's 2017 and 2018 balance sheets (in thousands of dollars) are shown. a. Sales for 2018

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Laiho Industries's 2017 and 2018 balance sheets (in thousands of dollars) are shown.2018 2017 $ 89,725 $102,850 Cash Accounts receivable 103,365 85,527 Inventories 38,444 34,982 $244,659 Total current assa. Sales for 2018 were $455,150,000, and EBITDA was 15% of sales. Furthermore, depreciation and amortization were 11% of net fixed assets, interest was $8,575,000, the corporate tax rate was 40%, and Laiho pays 40% of its net income as dividends. Given this information, construct the firm's 2018 income statement.
b. Construct the statement of stockholders equity for the year ending December 31, 2018, and the 2018 statement of cash flows.
c. Calculate 2017 and 2018 net operating working capital (NOWC) and 2018 free cash flow (FCF). Assume the firm has no excess cash.
d. If Laiho increased its dividend payout ratio, what effect would this have on corporate taxes paid? What effect would this have on taxes paid by the company's shareholders?
e. Assume that the firm's after-tax cost of capital is 10.5%. What is the firm's 2018 EVA?
f. Assume that the firm's stock price is $22 per share and that at year-end 2018 the firm has 10 million shares outstanding. What is the firm's MVA at year-end 2018? Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of...
Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
Free Cash Flow
Free cash flow (FCF) represents the cash a company generates after accounting for cash outflows to support operations and maintain its capital assets. Unlike earnings or net income, free cash flow is a measure of profitability that excludes the...
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Fundamentals of Financial Management

ISBN: 978-1337395250

15th edition

Authors: Eugene F. Brigham, Joel F. Houston

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