Chapter 3 - Financial Statement Analysis

Question 1

NOPAT

Answer 1

EBIT(1-T)

Question 2

NOWC

Answer 2

Current Op Assets - Current Op Liabilities

Question 3

FCF

Answer 3

(NOPAT+Dep,Amort) - (CE + Change in NOWC)

Question 4

EVA

Answer 4

NOPAT - (Investor Supplied Capital x Cost of Capital)

Question 5

Investor Supplied Capital

Answer 5

NOWC + Net Fixed Assets

Question 6

Capital Expenditures (considered plant, property, equipment)

Answer 6

Change in Net Fixed Assets + Depreciation

Question 7

What do you do if you need to find EBIT when given Interest, Net Income and Tax Rate? (#2 on HW 1)

Answer 7

Find EBT by taking NI/1-T, then work backwards to get EBIT.

Question 8

What is a current operating asset/liability?

Answer 8

They are current non interest bearing assets/liabilities. Typically not notes payable because it always has interest attached to it.

Question 9

A/R Formula

Answer 9

Sales per day x # of days it takes customers to pay

Question 10

What is Operating Income?

Answer 10

Operating income is EBIT

Question 11

Earnings Per Share (EPS)

Answer 11

Net Income/Number of Shares on Sale

Question 12

What is working capital?

Answer 12

Current Assets