Question Details

What is Sebring- amount of total  operating capital 


You have just obtained financial information for the past 2 years for Sebring Corporation.

SEBRING CORPORATION:  INCOME STATEMENTS FOR YEAR ENDING DECEMBER 31
(MILLIONS OF DOLLARS)

	2013	2012

Sales	$3,600.0  	  $3,000.0
Operating costs (excluding depreciation and amortization)	 3,060.0	 2,550.0
  EBITDA	$  540.0	$ 450.0
Depreciation and amortization	    90.0	0.0
  Earnings before interest and taxes	$  450.0	$  375.0
Interest 	    65.0	    60.0
  Earnings before taxes	$  385.0	$  315.0
Taxes (40%)	   154.0	   126.0
Net income available to common stockholders	$  231.0	$  189.0
Common dividends	$  181.0	$   13.0


Shares outstanding								100m.		   100m.
Stock price									$32		$23

The finance staff has concluded that the firm- after-tax percentage cost of capital (equity plus debt) is 10%.

SEBRING CORPORATION:  BALANCE SHEETS FOR YEAR ENDING DECEMBER 31
(MILLIONS OF DOLLARS)

	2013	2012
Assets:
Cash and marketable securities	$   36.0	$   30.0
Accounts receivable	   540.0	   450.0
Inventories	   540.0	   600.0
  Total current assets	$1,116.0	$1,080.0
Gross fixed assets	990.0	825.0
Net fixed assets	   900.0	825.0
Total assets	$2,016.0	$1,830.0

Liabilities and equity:
Accounts payable 	$  324.0	$  270.0
Notes payable	   201.0	   155.0
Accruals	   216.0	   180.0
  Total current liabilities	$  741.0	$  605.0
Long-term bonds	   450.0	   450.0
  Total debt	$1,191.0	$1,055.0
Common stock	   150.0	   150.0
Retained earnings	   675.0	   625.0
  Total common equity	$  825.0	$  775.0
Total liabilities and equity	$2,016.0	$1,830.0


1. What is Sebring- net operating profit after taxes (NOPAT) for 2013? 

a.	$150,000,000
b.	$225,000,000
c.	$270,000,000   
d.	$375,000,000

2. What is Sebring- net operating working capital for 20013? 

a.	$  540,000,000
b.	$  576,000,000  
c.	$  750,000,000
d.	$  985,000,000

3.  What is Sebring- amount of total  operating capital for 20013? 

a.	$  888,000,000
b.	$  900,000,000
c.	$1,275,000,000
d.	$1,476,000,000   

4.   What is Sebring- free cash flow for 2013? 

a.	$ 85,000,000
b.	$146,000,000
c.	$249,000,000   
d.	$255,000,000

5. Which of the following statements is CORRECT?

a.	The four most important financial statements provided in the annual report are the balance sheet, income statement, cash budget, and the statement of stockholders' equity.
b.	The balance sheet gives us a picture of the firm- financial position at a point in time.  
c.	The income statement gives us a picture of the firm- financial position at a point in time.
d.	The statement of cash flows tells us how much cash the firm must pay out in interest during the year.


6. Which of the following statements is CORRECT?

a.	MVA stands for market value added, and it is defined as follows:
	MVA = (Shares outstanding)(Stock price) + Book value of common equity.
b.	The primary difference between EVA and accounting net income is that when net income is calculated, a deduction is made to account for the cost of common equity, whereas EVA represents net income before deducting the cost of the equity capital the firm uses.
c.	MVA gives us an idea about how much value a firm- management has added during the last year.
d.	EVA stands for economic value added, and it is defined as follows:
EVA = NOPAT - (Investor-supplied oper. capital)(AT cost of capital %)  

7. Which of the following statements is most correct?

a.	Retained earnings, as reported on the balance sheet, represents the amount of cash a company has available to pay out as dividends to shareholders.
b.	70% of the interest received by corporations is excluded from taxable income.
c.	70% of the dividends received by corporations is excluded from taxable income. 
d.	Because taxes on long-term capital gains are not paid until the gain is realized, investors must pay the top individual tax rate on that gain.
e.	The corporate tax system favors equity financing, as dividends paid are deductible from corporate taxes.



Business Management Assignment Help, Business Management Homework help, Business Management Study Help, Business Management Course Help