3. (16 points) Prepare a statement of cash flows for Egon Castle Corp for the year ending December 31, 2016. See template on next page. Egon Castle 's 2016 income statement revealed sales of $1,400,000; EBITDA margin of 18%; interest expense of $22,000; and an effective tax rate of 24%. The increase in common stock and additional paid-in capital is due to issuing additional shares for cash. Comparative balance sheets for Egon Castle follow. (All Amounts in 000s) 2016 2015 Assets Cash xxx 470,000 $ Accounts receivable 180,000 70,000 Inventories 240,000 280,000 Prepaids 12,000 xxx Land 250,000 250,000 Building and equipment 1,500,000 1,300,000 Less: Accumulated depreciation (205,000) (175,000) Total assets xxx 2,208,300 $ Liabilities Accounts payable xxx 92,000 $ Accrued liabilities 11,000 15,000 Income taxes payable 24,000 xxx Stockholders' equity Common stock 610,000 700,000 Paid in capital in excess of par990,000 800,000 Retained earnings 640,000 585,350 Total liabilities and equity 2,600,000 $ xxx Egon Castle Corp Statement of Cash Flows (Indirect Approach) For the year ending December 31, 2016 Cash flows from operating activities: Net income Add (deduct) noncash effects on operating income Depreciation expense Change in accounts receivable Change in inventory Change in prepaid insurance Change in accounts payable Change in accrued liabilities Change in income taxes payable Net cash provided by operating activities Cash flows from investing activities: Purchase of equipment Net cash used by investing activities Cash flows from financing activities: Proceeds from issuing stock Dividends on common Net cash provided by financing activities Net change in cash Cash balance at January 1, 2016 Cash balance at December 31, 2016

Refer to the selected financial statements and notes 4. (6 points) Calculate quality of earnings ratio for 2019, 2018 and 2017. What can you conclude from your calculations? 5. (10 points) Using inputs solely from the cash flow statement, calculate the companys FCF for 2019. 6. (6 points) Using a market cap of $48.2B, and assuming a cost of equity of 11%, calculate the long term growth rate that is implied by the companys valuation. 7. (12 points) Calculate the companys EBITDA, EBITDA margin and EBITDA multiple. 8. (4 points) How does this multiple compare to the industry average? Quantify your answer. (You have to make an educated guess at this companys industry)

9. Refer to item 6 selected fiancial data. calculate the dividend payout ratio for the last 5 years.

10. calculate the current dividend yield based on a stock price of $96.

11. calculate the comapny's PE

12. calculate the gross margin for the past 3 years.