Begin with the partial model in the file Ch02 P15 Build a Model.xls on the textbook’s Web site.
a. Using the financial statements shown below for Lan & Chen Technologies, calculate net operating working capital, total net operating capital, net operating profit after taxes, free cash flow, and return on invested capital for 2013. (Hint: Start with the partial model in the file and report all dollar figures in thousands to reduce clutter.)
b. Assume there were 15 million shares outstanding at the end of 2013, the year-end closing stock price was $65 per share, and the after-tax cost of capital was 8%.
Calculate EVA and MVA for 2013.
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 33,100 31,500
EBIT $ 99,200 $ 94,500
Interest expense 10,470 8,600
Pre-tax earnings $ 88,730 $ 85,900
Taxes (40%) 35,492 34,360
Net income $ 53,238 $ 51,540
Common dividends $ 43,300 $ 41,230
Addition to retained earnings $ 9,938 $ 10,310
Lan & Chen Technologies: December 31 Balance Sheets
2013 2012
Assets
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 $807,050 $768,600
Liabilities and Equity
Accounts payable $ 94,500 $ 90,000
Accruals 47,250 45,000
Notes payable 26,262 9,000
Total current liabilities $168,012 $144,000
Long-term debt 94,500 90,000
Total liabilities $262,512 $234,000
Common stock 444,600 444,600
Retained earnings 99,938 90,000
Total common equity $544,538 $534,600
Total liabilities and equity $807,050 $768,600

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