Reference no: EM132793095
Question - I. In 2020, Cane Manufacturing has CAPX of $125,000, Depreciation of $40,000, and EBIT of $450,000. The tax rate is 30%. The following 2019 and 2020 accounts are:
Item 2019 2020
Required cash 50,000 75,000
Accounts receivable 200,000 250,000
Inventories 300,000 360,000
Accounts payable 100,000 120,000
Accrued liabilities 40,000 50,000
Each part below is worth 5 marks. Answer the following:
a) What is the change in Net Operating Working Capital in 2020?
b) What is the Enterprise Value Cash Flow in 2020?
II. PT Industries has debt of $1,450. In Parts a) and b) assume that surplus cash is zero. Parts a), b), and c) are each worth 4 marks. Part d) is worth 4 marks. Answer the following:
a) If the equity value is $2,650, what is the enterprise value?
b) If the enterprise value is $5,400, what is the equity value?
c) Assume PT Industries has $500 in surplus cash. If the equity value is $2,650 as in part a), what is the enterprise value?
d) Assume PT Industries has $500 in surplus cash. If the enterprise value is $5,400 as in part b), what is the equity value?
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