a) Calculate the most recent year's Free Cash Flow (FCF) of the firm.

Cumberland Industries: Income Statement (In thousands of dollars)	2020
Sales	$750,000
Operating costs excluding depreciation	$487,500
EBITDA	$262,500
Depreciation (Cumberland has no amortization charges)	$12,387
EBIT	$250,113
Interest expense	$10,000
EBT	$240,113
Taxes (40%)	$60,028
Net income	$180,085

 

Cumberland Industries December 31 BalanceSheets (In thousands of dollars)	2020	2019
Assets
Cash and cash equivalents	$130,000	$74,625
Short-term investments	25,000	15,100
Accounts Receivable	108,470	85,527
Inventories	56,450	34,982
Total current assets	$319,920	$210,234
Net fixed assets	123,869	42,436
Total assets	$443,789	$252,670
Liabilities and equity
Accounts payable	$30,761	$23,109
Accruals	30,405	22,656
Notes payable	12,717	14,217
Total current liabilities	$73,883	$59,982
Long-term debt	80,263	63,914
Total liabilities	$154,146	$123,896
Common stock	$97,797	$90,000
Retained earnings	191,846	38,774
Total common equity	$289,643	$128,774
Total liabilities and equity	$443,789	$252,670

 

b) Calculate Return on Invested Capital (ROIC) of the firm. Did Growth Add Value? You can assume WACC = 15%.

 c) What is the most recent year total dividend payment of the firm?

Answer rating: 100% (QA)

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