Complete the following textbook assignment and submit using a Word document.
- Textbook Chapter 2: Mini-case a. through i. only
Length: This assignment must be long enough to completely answer the question.
Grading:
This assignment is worth 25 points and is due midnight Sunday.
Rubric;
12 pts based on content (completely answering each question)
13 pts based on quality of response
Mini Case
Jenny Cochran, a graduate of the University of Tennessee with 4 years of experience as an equities analyst, was recently brought in as assistant to the chairman of the board of Computron Industries, a manufacturer of computer components.
Resource
The following financial statements (attached) are available in the file Ch02 Tool Kit.xlsx in the Mini Case tab. Because the statements will be used to project future years, they are organized with the most recent year at the far right.
During the previous year, Computron had doubled its plant capacity, opened new sales offices outside its home territory, and launched an expensive advertising campaign. Cochran was assigned to evaluate the impact of the changes. She began by gathering financial statements and other data.
Assume that you are Cochran’s assistant and that you must help her answer the following questions:
a- What effect did the expansion have on sales and net income? What effect did the expansion have on the asset side of the balance sheet? What effect did it have on liabilities and equity?
b- What do you conclude from the statement of cash flows?
c- What is free cash flow? Why is it important? What are the five uses of FCF?
d- What is Computron’s net operating profit after taxes (NOPAT)? What are operating current assets? What are operating current liabilities? How much net operating working capital and total net operating capital does Computron have?
e- What is Computron’s free cash flow (FCF)? What are Computron’s “net uses” of its FCF?
f- Calculate Computron’s return on invested capital (ROIC). Computron has a 10% cost of capital (WACC). What caused the decline in the ROIC? Was it due to operating profitability or capital utilization? Do you think Computron’s growth added value?
g- Cochran also has asked you to estimate Computron’s Economic Value Added (EVA). She estimates that the after-tax cost of capital was 10% in both years.
h- What happened to Computron’s Market Value Added (MVA)?
I- What are the differences between progressive tax rates and flat tax rates? Are U.S. corporate tax rates progressive or flat? Identify the rate or rates that apply to a corporation’s taxable income.
please use the attachment to answer