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Exercise on FCF

The document presents the financial statements of Nova Industries, including balance sheets and income statements for the years 2017 and 2018. It highlights a total asset increase from 560.0 to 602.0 and a net income rise from 62.9 to 76.98. Additionally, it details investment outlays, project operating cash flows, and the distribution of free cash flows to investors.

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6 views

Exercise on FCF

The document presents the financial statements of Nova Industries, including balance sheets and income statements for the years 2017 and 2018. It highlights a total asset increase from 560.0 to 602.0 and a net income rise from 62.9 to 76.98. Additionally, it details investment outlays, project operating cash flows, and the distribution of free cash flows to investors.

Uploaded by

p24prakharb
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Nova Industries

Balance sheets as of ______


Assets ### ###
Cash and CE 12.0 10.0
Accounts receivables 180.0 150.0
Inventories 180.0 200.0
Total current assets 372.0 360.0
Undeveloped property 70.0 50.0
Net plant and equipment 230.0 200.0
Total assets 602.0 560.0
Liabilities and equity
Accounts payable 108.0 90.0
Accruals 72.0 60.0
Notes payable 27.0 51.5
Total current liabilities 207.0 201.5
Long-term bonds 190.0 150.0
Total liabilities 397.0 351.5
Common stock (50 mil shar 50.0 50.0
Retained earnings 225.0 208.5
Total liabilities and equity 672.0 610.0

Income statement for yeYr 2018 Yr 2017


Sales 1,200.0 1,000
Optg costs excl. deprn 1,020.0 850.0
EBITDA 180.0 150.0
Depreciation and amortisat 30.0 25.0
EBIT (operating income) 150.0 125.0
Interest expense 21.7 20.2
EBT 128.3 104.8
Income taxes @ 40% 51.32 41.9
Net income (Profit after tax 76.98 62.9
Dividend paid 60.5 46.4
Nova Industries
Balance sheet (Financial view of the firm)
### ###
Capital employed NOPAT 90.0
Operating current assets 372.0 360.0 NFA -30.0
Operating current liabilities 180.0 150.0 NOWC 18.0
NOWC (net Operating working capita 192.0 210.0 FCF 78.0
Net plant and equipment 230.0 200.0
Capital used in operations (OC) 422.0 410.0 FCFL:
Capital used for non-operating activi 70.0 50.0 Int (1-t) -13.02
Total capital employed 492.0 460.0 Loan prl 15.5
Sources of capital FCFE:
Financial liabilities Div paid -60.5
Notes payable 27.0 51.5 share BB 0
Long-term bonds: current portion 0.0 0.0 Non-optg:
Long-term bonds: non-current por 190.0 150.0 und pty -20.0
Debt capital 217.0 201.5 FCF used -78.02
Equity capital
Common stock at par value 50.0 50.0
Retained earnings 225.0 208.5
Total equity capital 275.0 258.5
Total capital raised 492.0 460.0

Income statement (Financial view of the firm)


EBIT (operating income) 150.0
Income tax exp (assuming no debt) 60.0
Net operating profit after tax (NOPA 90.0

Nova Industries
Statement of stockholders' equity
CS RE Total
Beginning of the year 50.0 208.5 258.5
Shares issued during year 2018 0.0
Shares bought back during year 201 0.0
Earnings for year 2018 76.98
Dividend paid 60.5
Balances at end of year 2018 50.0 224.98 275.0
End of Year: yr 2018

I. Investment Outlays
Equipment cost -60
Installation 0
CAPEX -60

Increase in operating current assets -12


Increase in accounts payable -30
DNOWC 18

II. Project Operating Cash Flows


Total revenues 1,200
Operating costs excluding depreciat 1,020
Depreciation 30
Total costs 1,050
EBIT (or operating income) 150
Taxes on operating income 60
EBIT(1 –T) = AT oper. income 90
Add back depreciation 30
EBIT(1 – T) + DEP 120

III. Project Termination Cash Flows


Salvage value (taxed as ord. income) 0
Tax on salvage value 0
After-tax salvage value 0
DNOWC = Recovery of NOWC 0

Free cash flows = EBIT(1 – T)


+ DEP – CAPEX – DNOWC 78

Distribution of FCF to investors


FCF distributed to lenders 2.48
FCF distributed to equity shareholder -60.5
FCF used for non-opeating assets -20.0
-78.0

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