Professional Documents
Culture Documents
8. Value-based management focuses on sales growth, profitability, capital requirements, the weighted
average cost of capital, and dividend growth.
a.
True
b.
False
9. If a companys expected return on invested capital is less than its cost of equity, then the company will
always have a negative market value added (MVA).
a.
True
b.
False
10. You have obtained information for the past 2 years for the MicroShaft Corporation. Use this
information to determine FCF for 2001.
2001
2000
Sales
1200.0
1000.0
Operating Costs
1020.0
850.0
Depreciation
30.0
25.0
Earnings before income and taxes
150.0
125.0
Interest
21.7
20.2
Earnings before taxes
128.3
104.8
Taxes (40%)
51.3
41.9
Income available to common shareholders
77.0
62.9
Dividends
60.5
4.4
Cash and Equivalents
Accounts Receivable
Inventory
Net Plant and Equipment
Accounts Payable
Notes Payable
Accruals
Long term bonds
50 million Common Shares
Retained Earnings
a.
b.
c.
d.
e.
58.0
60.0
62.0
64.0
65.0
12.0
180.0
180.0
300.0
108.0
67.0
72.0
150.0
50.0
225.0
10.0
150.0
200.0
250.0
90.0
51.5
60.0
150.0
50.0
208.5