Here are simplified financial statements for Watervan Corporation: INCOME STATEMENT(Figures in $ millions) Net sales$899.00 Cost of
Question:
Here are simplified financial statements for Watervan Corporation:
INCOME STATEMENT(Figures in $ millions)
Net sales$899.00
Cost of goods sold759.00
Depreciation49.00
Earnings before interest and taxes (EBIT)$91.00
Interest expense30.00
Income before tax$61.00
Taxes12.81
Net income$48.19
BALANCE SHEET(Figures in $ millions)
End of Year/Start of Year
Assets
Current assets $387-----$348
Long-term assets294-----240
Total assets $681-----$588
Liabilities and shareholders' equity
Current liabilities $212-----$175
Long-term debt 126-----139
Shareholders' equity343-----274
Total liabilities and shareholders' equity $681-----$588
The company's cost of capital is 8.5%.
a.Calculate Watervan's economic value added (EVA).(Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.)
b.What is the company's return on capital? (Use start-of-year rather than average capital.)(Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
c.What is its return on equity? (Use start-of-year rather than average equity.)(Enter your answer as a percent rounded to 2 decimal places.)
d.Is the company creating value for its shareholders?