Testbank for Business Finance Essay

16251 Words Oct 25th, 2014 66 Pages
CHAPTER TWO PROBLEMS

1. Last year Rattner Robotics had $5 million in operating income (EBIT). The company had net depreciation expense of $1 million and an interest expense of $1 million; its corporate tax rate was 40 percent. The company has $14 million in current assets and $4 million in non-interest-bearing current liabilities; it has $15 million in net plant and equipment. It estimates that it has an after-tax cost of capital of 10 percent. Assume that Rattner’s only non-cash item is depreciation.

a. What was the company’s net income for the year? $2.4 million

b. What was the company’s net cash flow? $3.4 million

c. What was the company’s net operating
…show more content…
1999 Cash and marketable securities $ 12.0 $ 10.0 Accounts receivable 180.0 150.0 Inventories 180.0 200.0 Net plant and equipment 300.0 250.0 Total Assets $ 672.0 $ 610.0

Accounts payable $ 108.0 $ 90.0 Notes payable 67.0 51.5 Accruals 72.0 60.0 Long-term bonds $ 150.0 $ 150.0 Common stock (50 million shares) 50.0 50.0 Retained earnings 225.0 208.5 Total liabilities and equity $ 672.0 $ 610.0

a. What is the net operating profit (NOPAT)

Related Documents