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Nayan (P10X05) IIM Ranchi Exchange student

Economic value added Calculation for the


Net Operating Profit After Tax
Operating Earnings
+ Capitalization of R&D
+ Capitalization of Advertizing
+ Goodwill Amortization added back
+ Restructuring add-back
Net Operating Profit before Taxes (NOPBT)
- Taxes
Net Operating Profit after Taxes (NOPAT)
- Capital Charge @ 11%

Economic Value Added


EVA Improvement in the year 2000

Calculation of Bonus for year 2000


Managers Base Salary
Bonus Target {(60% of Base Salary (100% based on
division EVA)}
EVA Improvement Goal
EVA Target
EVA Interval
Manager Base Salary
Bonus Target(100% based on division EVA)
EVA Performance
Calculation of Bonus for year 2000
(I) New Bank Balance for Bonus Payout
(II) Bonus Payout in the year 2000 (Answer to Question No 2)

Ending Balance (I - II)

Economic value added Calculation for the


Net Operating Profit After Tax
Operating Earnings
+ Capitalization of R&D

+ Capitalization of Advertizing
+ Goodwill Amortization added back
+ Restructuring add-back
Net Operating Profit before Taxes (NOPBT)
- Taxes
Net Operating Profit after Taxes (NOPAT)
- Capital Charge @ 11%

Economic Value Added


EVA Improvement in the year 2001

Bonus Estimation for the year 2001 based on the u


Managers Base Salary
Bonus Target {(60% of Base Salary (100% based on
division EVA)}
EVA Improvement Goal
EVA Target
EVA Interval
Manager Base Salary
Bonus Target(100% based on division EVA)
EVA Performance
Calculation of Bonus for year 2001
Beginning Bonus Bank Balance
New Bank Balance for Bonus Payout
Bonus Payout in the year 2000 (Answer to Question No 3)
Ending Balance

student

ulation for the year 2000


1999

2000

42545000
26059400
43666.67
7500000
NIL
76148066.667
7875000
68273066.667
7510037.33

92550000
46555800
48333.33
10000000
Nil
149154133.33
18725000
130429133.33
14347204.67

60763029.333

116081928.67
55318899.33

200000
120000
2150000
5070000
12000000
200000
60%
5.59
671189
671189 (Target Bonus x EVA performance
(Target Bonus +50% of Remaining
395594.5 Balance)
275594.50

ulation for the year 2001


2000
92550000
46555800

2001
24694000
16006200

48333.33
10000000
Nil
149154133.33
18725000
130429133.33
14347204.67

31666.67
Data Insufficient
Nil
40731866.67
121700
40610166.67
4467118.33

116081928.67

1 based on the underlined condition


200000
120000
2150000
5070000
12000000
200000
60%
-5.68
-681389
275594
-405794
NIL as Balance is negative
-405794

36143048.33
-79938880.33

1995
1996
1997
1998
1999
Research and Developemt
1067300
###
###
### 9327000
Expenses as Reported on P& L
0
1995 2134600 2134600 2134600 2134600 2134600
1996
2497400 2497400 2497400 2497400
1997
2922000 2922000 2922000
1998
3418800 3418800
1999
1865400
2000
2000 R&D Amortization under EVA
Cumulative R&D Expense(P&L)
###
###
###
###
###
Less: Cumulative
2134600
6766600
###
###
###
Amortization(EVA)
Capatalized R&D for EVA
Calculation of Capital

###

2000

For Calculating Q.3


2001

39000000 Data Insufficient


NA
NA
2497400
NA
2922000
2922000
3418800
3418800
1865400
1865400
7800000
7800000
18503600
NA
103191000 Data Insufficient
56635200 Data Insufficient

###

16006200

1996

1997

1998

Consumer Advertising Expenses


34000
38000
41000
1996 11333.33 11333.33 11333.33
1997
12666.67 12666.67
1998
13666.67
1999
2000
2000 Advertising Amortization under EVA
Cumulative Advertising Expense(P&L)

34000

72000

113000

Less: Cumulative Amortization(EVA)


11333.33 35333.33 73000.00
Capitalized Advertizing for 2000 EVA
Calculation of Capital

1999

45000
12666.67
13666.67
15000

158000

2000

For Calculating Q.3


2001

50000 Data Insufficient


NA
NA
13666.67 NA
15000
15000
16666.67
16666.67
45333.33 NA
208000 Data Insufficient

### 159666.67 Data Insufficient


43666.67

48333.33

31666.67

1996

Goodwill Amortization

1997

1998

1999

0 2500000 5000000 7500000

For Calculating Q.3


2000
2001

### Data Insufficient