a. Using the financial statements shown below, calculate net operating working c
ID: 2745802 • Letter: A
Question
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. Lan & Chen Technologies: Income Statements for Year Ending December 31 (Thousands of Dollars) 2013 2012 Sales $945,000 $900,000 Expenses excluding depreciation and amortization 812,700 774,000 EBITDA $132,300 $126,000 Depreciation and amortization 33.10031,500 EBIT $99,200 $94,500 Interest Expense 10,470 8,600 EBT $88,730 $85,900 Taxes (40%) 35,492 34360 Net income S53.238 $$51,540 Common dividends Addition to retained earnings $43,300 $9,938 $41,230 $10,310 Lan & Chen Technologies: December 31 Balance Sheets (Thousands of Dollars) Assets 2013 2012 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 assets 330,750 315,000 Total assets S807050 0E $768.600 Liabilities and equity Accounts payable Accruals Notes payable Total current liabilities Long-term debt Total liabilities Common stock Retained Eamings Total common equity Total liabilities and equity $94,500 $90,000 47,250 45,000 26,262 9,000 $168,012 $144,000 94.500 90,000 $262,512 $234,000 444,600 444,600 99,938 90,000 $544.538 $534,600 S807 050 $768.600 Key Input Data Tax rate 40% Net operating working capitalExplanation / Answer
1. Net Operating Working Capital (Amount in $)
Particulars
2013
2012
Total Current Assets
476,300
453,600
Less: Total Current Liabilities
(168,012)
(144,000)
Net Operating Working Capital
308,288
309,600
2. Total Net Operating Capital (Amount in $)
Particulars
2013
2012
Net Operating Working Capital
308,288
309,600
Add: Non Current Assets
330,750
315,000
Total Net Operating Capital
639,038
624,600
3. Net Investment in Total Net Operating Capital
= Total Net Operating Capital of 2013 - Total Net Operating Capital 2012
= $639,038 - $624,600
= $14,438
4. Net Operating Profit after taxes (NOPAT) for 2013
NOPTA = EBIT * (1-T) = $99,200 * (1-0.40) = $59,520
5. Free Cash Flow (FCF) for 2013
FCF = NOPAT - Net Investment in Total Net Operating Capital
FCF = $59,520 - $14,438 = $45,082
6. Return on Invested Capital (ROIC) for 2013
ROIC = NOPAT/ Total Net Operating Capital * 100
ROIC = $59,520/$639,038 * 100
ROIC = 9.31%
Particulars
2013
2012
Total Current Assets
476,300
453,600
Less: Total Current Liabilities
(168,012)
(144,000)
Net Operating Working Capital
308,288
309,600
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