Finance Assignment

SchoolSucks12
Task5.xlsx
Home>Business & Finance homework help>Accounting homework help>Finance Assignment

Given

Industry Avg Competitor 1 ACME Iron
Shares Outstanding 25,000,000.00 200,000,000.00 15,000,000.00
Stock Price $27.75 $35.00 $27.50
Market Capitalization 693,750,000.00 700,000,000.00 412,500,000.00
Debt & Equity (2015) 675,000,000.00 695,455,000.00 300,423,000.00
WACC 13% 15% 12%
EBIT 17,975,000.00 18,255,000.00 10,742,000.00
Net Earnings 15,000,000.00 15,000,000.00 7,045,000.00

Price per share

To compute the P/E ratio and market capitalization for everyone.
P/E ratio = price per share / earnings per share (EPS)
Industry Avg Competitor 1 ACME Iron
Shares Outstanding 25,000,000 20,000,000 15,000,000
Stock Price $27.75 $35.00 $27.50
Market Capitalization $693,750,000.00 $700,000,000.00 $412,500,000.00
Debt & Equity (2015) 675,000,000 695,455,000 300,423,000
WACC 13% 15% 12%
EBIT 17,975,000 18,255,000 10,742,000
Net Earnings 15,000,000 15,000,000 7,045,000
EPS = Net earnings/No of shares 0.6 0.75 0.4696666667
P/E ratio $46.25 $46.67 $58.55

EVA,MVA

EVA is the calculation of what profits remain after the cost of company’s capital-both debt and equity-are 
deducted from operating profit.
Economic Value Added = (Return on Capital Invested – WACC) (Capital Invested)
As per the given information, WACC is given, and then,
Calculation of Return on operating capital = (NOPAT / Operating Capital) X 100.
NOPAT = Net Operating Profit After Tax.
Particulars Industry Average ($) Competitor 1 ($) ACME Iron ($)
Operating EBIT 17,975,000.00 18,255,000.00 10,742,000.00
Less: Tax (nil)
NOPAT 17,975,000.00 18,255,000.00 10,742,000.00
Operating Capital as said in the given problem:
Particulars Industry Average ($) Competitor 1 ($) ACME Iron ($)
quity & Debt 675,000,000.00 695,455,000.00 300,423,000.00
Return on operating capital (ROOC) = (NOPAT / Operating Capital) X 100.
Sl.No Particulars Industry Average ($) Competitor 1 ($) ACME Iron ($)
1 NOPAT 17,975,000.00 18,255,000.00 10,742,000.00
2 Equity & Debt (Operating capital) 675,000,000.00 695,455,000.00 300,423,000.00
3 ROOC (1/2)*100 2.662962963 2.6249002452 3.5756250354
Approximate to 3 3 4
Economic Value Added = (Return on Capital Invested – WACC) (Capital Invested)
Sl.No Particulars Industry Average ($) Competitor 1 ($) ACME Iron ($)
1 ROOC 3% 3% 4%
2 WACC 13% 15% 12%
3 Capital Invested 675,000,000.00 695,455,000.00 300,423,000.00
4 EVA (1-2)*3 -87,750,000 -104,318,250 -36,050,760
Computation of the Market Value Added (MVA):
This is the difference between the stock market capitalization of a company and the capital that has been 
invested in it.
Market Value Added (MVA) = Market Capitalization – Capital Invested.
Sl.No Particulars Industry Average ($) Competitor 1 ($) ACME Iron ($)
1 Market Capitalization 693,750,000.00 700,000,000.00 412,500,000.00
2 Capital Invested 675,000,000.00 695,455,000.00 300,423,000.00
3 Market Value Added (1-2) 18,750,000.00 4,545,000.00 112,077,000.00