Module-3: Problem Solving Gi Saved 2 Net income $ 73. 47 BALANCE SHEET (Figures in $ millions) 10 End of Start of points Year Year Assets Current assets $ 371 316 X 04:02:38 Long-term assets 262 224 Total assets $ 633 $ 540 Liabilities and shareholders' equity Current liabilities $ 196 159 Long-term debt 110 123 eBook Shareholders' equity 327 258 Total liabilities and shareholders' equity $ 633 $ 540 Print The company's cost of capital is 8.5%. Required: References a. Calculate Watervan's economic value added (EVA). Note: 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.) Note: 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.) Note: Enter your answer as a percent rounded to 2 decimal places. d. Is the company creating value for its shareholders? a. Economic value added million b. Return on capital % c. Return on equity d. Is the company creating value for its shareholders?3 Here are simplified financial statements for Phone Corporation in 2020: INCOME STATEMENT 10 (Figures in $ millions) points Net sales $ 12, 400 Cost of goods sold 3, 660 Other expenses X 04:02-22 4,137 Depreciation 2, 278 Earnings before interest and taxes (EBIT) $ 2, 325 Interest expense 645 Income before tax $ 1,680 Taxes (at 21%) 353 Book Net income $ 1, 327 Dividends $ 796 Print BALANCE SHEET (Figures in $ millions) End of Year Start of Year Assets References Cash and marketable securities 6 81 $ 156 Receivables 982 2. 330 Inventories 147 198 Other current assets 827 892 Total current assets $ 3, 037 $ 3,570 Net property, plant, and equipment 19, 893 19, 835 Other long-term assets 4, 136 3, 690 Total assets $ 27, 066 $ 27, 095 Liabilities and shareholders' equity Payables $ 2,484 2, 960 Short-term debt 1, 379 1, 533 Other current liabilities 771 747 Total current liabilities 4, 634 5, 240 Long-term debt and leases 9 , 010 8, 265 Other long-term liabilities 6,098 6,069 Shareholders' equity 7, 324 7,521 Total liabilities and shareholders' equity $ 27, 066 $ 27 ,095 Calculate the following financial ratios for Phone Corporation: Note: Use 365 days in a year. Do not round intermediate calculations. Round your final answers to 2 decimal places. a. Return on equity (use average balance sheet figures) % b. Return on assets (use average balance sheet figures) % C. Return on capital (use average balance sheet figures) % d. Days in inventory (use start-of-year balance sheet figures) days e. Inventory turnover (use start-of-year balance sheet figures) f. Average collection period (use start-of-year balance sheet figures) days g. Operating profit margin % h. Long-term debt ratio (use end of-year balance sheet figures) L. Total debt ratio (use end of-year balance sheet figures) j- Times interest earned k. Cash coverage ratio 1. Current ratio (use end of-year balance sheet figures)Saved 9 A firm has a long-term debt-equity ratio of 0.4. Shareholders' equity is $0.98 million. Current assets are $320,000, and the current ratio is 2.0. The only current liabilities are notes payable. What is the total debt ratio? Note: Round your answer to 2 decimal places. 10 points Total debt ratio 8 04:01:32 eBookSaved 10 A firm has a debt-to-equity ratio of 0.85 and a market-to-book ratio of 2.5. What is the ratio of the book value of debt to the market value of equity? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. 10 points Book debt-to-market equity ratio 8 04:01:0911 Long-term debt ratio 0.1 Times interest earned 10.0 Current ratio 1.3 1.0 10 Quick ratio Cash ratio 0.3 points Inventory turnover 4.0 Average collection period 73 days X 04:01:01 Use the above information from the tables to work out the following missing entries, and then calculate the company's return on equity. Note: Inventory turnover, average collection period, and return on equity are calculated using start-of-year, not average, values. eBook Complete this question by entering your answers in the tabs below. Print Income Statement Balance Sheet Use the above information from the tables to work out the following missing entries, and then calculate the company's return References on equity. Note: Inventory turnover, average collection period, and return on equity are calculated using start-of-year, not average, values. Note: Enter your answers in millions. Round intermediate calculations and final answers to 2 decimal places. INCOME STATEMENT (Figures in $ millions) Net sales Cost of goods sold Selling, general, and administrative expenses 30.00 Depreciation 40.00 Earnings before interest and taxes (EBIT) Interest expense Income before tax Tax (35% of income before tax) Net income Income Statement Balance Sheet >11 Long-term debt ratio 0.1 Times interest earned 10.0 Current ratio 1. 3 Quick ratio 1.0 Cash ratio 0.3 joints Inventory turnover 4.0 Average collection period 73 days 2 04:00:54 Use the above information from the tables to work out the following missing entries, and then calculate the company's return on equity. Note: Inventory turnover, average collection period, and return on equity are calculated using start-of-year, not average, values. eBook Complete this question by entering your answers in the tabs below. Print Income Statement Balance Sheet Use the above information from the tables to work out the following missing entries, and then calculate the company's return References on equity. Note: Inventory turnover, average collection period, and return on equity are calculated using start-of-year, not average, values. Note: Enter your answers in millions. Round intermediate calculations and final answers to 2 decimal places. Show less BALANCE SHEET (Figures in $ millions) This Year Last Year Assets Cash and marketable securities 40.00 Accounts receivable 54.00 Inventories 46.00 Total current assets 140.00 Net property, plant, and equipment 45.00 Total assets $ 185.00 Liabilities and shareholders' equity Accounts payable $ 30.00 5 25.00 Notes payable 40.00 45.00 Total current liabilities $ 70.00 Long-term debt 15.00 Shareholders' equity 100. Total liabilities and shareholders' equity 230.00 $ 185.00