Build a Model 11/26/18 Chapter: 2 Problem: 21 a. Using the financial statements shown below, calculate net operating working capital, total net operating capital, net operating profit after taxes, free cash flow, and return on invested capital for the most recent year. The federal-plus-state tax rate is 25%. Lan & Chen Technologies: Income Statements for Year Ending December 31 (Millions of Dollars) 2020 2019 Sales $945,000 $900,000 Expenses excluding depreciation and amortization 812,700 774,000 EBITDA $132,300 $126,000 Depreciation and amortization 33,100 31,500 EBIT $99,200 $94,500 Interest Expense 10,400 8,900 EBT $88,800 $85,600 Taxes (25%) 22,200 21,400 Net income $66,600 $64,200 Common dividends $43,300 $41,230 Addition to retained earnings $23,300 $22,970 Lan & Chen Technologies: December 31 Balance Sheets (Millions of Dollars) Assets 2020 2019 Cash and cash equivalents $47,250 $45,000 Short-term investments 3,800 3,600 Accounts Receivable 283,500 270,000 Inventories 141,750 135,000 Total current assets $476,300 $453,600 Net fixed asse 330,750 315,000 Total assets $807,050 $768,600 Liabilities and equity Accounts payable $94,500 $90,000 Accruals 47,250 45,000 Notes payable 17,400 9,000 Total current li $159, 150 $144,000 Long-term debt 90,000 90,000 Total liabilities $249, 150 $234,000 Common stock $444,600 $444,600 Retained Earnings 113,300 90,000 Total common $557,900 $534,600 Total liabilities and equity $807,050 $768,600 Key Input Data Tax rate 25% Net operating working capital (NOWC) NOWC = Operating Operating current 2020 current assets liabilities 2020 NOWC = 2020 NOWC = Operating Operating current 2019 NOWC = current assets liabilities 2019 NOWC = 2019 NOWC = Total net operating capital (TNOC) 2020 NOC = NOWC Fixed assets + 2020 TNOC = 2020 TNOC = 2019 TNOC = NOWC Fixed assets 2019 TNOC = 2019 TNOC = Investment in total net operating capital 2020 2019 2020 Inv. In TOC = TNOC TNOC 2020 Inv. In TOC = 2020 Inv. In TOC = Net operating profit after taxes 2020 NOPAT = EBIT ( 1 - T ) X 2020 NOPAT = X 2020 NOPAT = Free cash flow 2020 FCF = NOPAT Investment in total net operating capital 2020 FCF = 2020 FCF = Return on invested capital 2020 ROIC = NOPAT Total net operating capital 2020 ROIC = 2020 ROIC =