The following income statements and other information are available for the Schn

Question

The following income statements and other information are available for the Schneider Company: 2014 2013 2012 Sales $375,100,000 $248,300,000 $193,500,000 Less cost of goods sold 206,305,000 119,184,000 92,880,000 Gross margin 168,795,000 129,116,000 100,620,000 Less: Selling and administrative costs 26,257,000 24,830,000 19,350,000 Research and development 15,004,000 12,415,000 9,675,000 Income from operations 127,534,000 91,871,000 71,595,000 Less taxes on income 38,260,200 27,561,300 21,478,500 Net income $89,273,800 $64,309,700 $50,116,500 Total assets $710,600,000 $669,200,000 $443,900,000 Noninterest-bearing current liabilities 137,600,000 11,340,000 98,070,000 Cost of capital 12% 12% 12% Calculate EVA for 2014. Assume that for purposes of calculating EVA, the company capitalizes research and development expenditures and amortizes them over three years, including the year they are incurred. For external reporting purposes, research and development is expensed in the year incurred, as indicated in the income statements above. (Round answer to the nearest whole dollar, e.g. 5,725.) EVA for 2014 $

Explanation / Answer

2014 2013 2012 a Gross Margin 168795000 129116000 100620000 b Selling and admin cost 26257000 24830000 19350000 c R&D 15004000 12415000 9675000 d 2012 3225000 3225000 3225000 e 2013 4138333.333 4138333.333 f 2014 5001333.333 g R&D for EVA (d+e+f) 12364666.67 7363333.333 3225000 h Operating Income (a-b-c-g) 130173333.3 96922666.67 78045000 i Taxes 38260200 27561300 21478500 j Tax rate 30% 30% 30% k NOPAT (h*(1-j)) 91121333.33 67845866.67 54631500 l Assets 710600000 669200000 443900000 m Liablities 137600000 11340000 98070000 n Capital Employed (l-m) 573000000 657860000 345830000 o Cost of Capital 12% 12% 12% p Cost of Capital Value (n * o) 68760000 78943200 41499600 q EVA (k-p) 22361333 -11097333 13131900

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