A firm has total invested capital of dollar 1,000,000, an after-tax percentage cost of capital of 10 percent, and EBIT of dollar 150,000. Its tax rate is 40 percent. What is the firm's Economic Value Added (EVA)?
Explanation
This question tests the user's ability to calculate Economic Value Added (EVA) using the formula and provided financial data.
Other questions
What are the four basic financial statements that a corporation provides in its annual report to stockholders?
Which financial statement is described as providing a 'snapshot' of a firm's financial position at a specific point in time?
In the context of a balance sheet, how is stockholders' equity defined as a residual amount?
Why are depreciation and amortization added back to net income when calculating cash flow from operating activities?
What does the term 'retained earnings' on a balance sheet represent?
According to the balance sheet for Allied Food Products, the company had current assets of dollar 1,000 million and current liabilities of dollar 310 million in 2018. What was its net working capital for that year?
Allied Food Products had total current assets of dollar 1,000 million (with no excess cash), total current liabilities of dollar 310 million, and notes payable of dollar 110 million in 2018. What was its net operating working capital (NOWC)?
A company has short-term debt (notes payable) of dollar 110 million and long-term bonds of dollar 750 million. Its accounts payable are dollar 60 million and its accruals are dollar 140 million. What is the company's total debt?
What is the primary reason that a company's market value of equity can be significantly different from its book value of equity?
Which of the following is the best definition for operating income, also known as EBIT?
Allied Food Products' 2018 income statement showed sales of dollar 3,000 million and total operating costs of dollar 2,716.2 million. What was its operating income (EBIT) for 2018?
What is the primary reason that a company with a high level of debt might report a lower net income than an identical company with no debt, even if their operating performances are the same?
Which financial statement shows how much cash the firm began the year with, how much it ended up with, and what it did to increase or decrease its cash?
An increase in which of the following items would be treated as a cash inflow (a source of cash) on the statement of cash flows?
Which of the following activities would be classified under 'Financing Activities' on the statement of cash flows?
In the context of the Statement of Stockholders' Equity, how is the end-of-year balance for retained earnings calculated?
What is the definition of Free Cash Flow (FCF)?
Allied Food Products has EBIT of dollar 283.8 million, a tax rate of 40 percent, depreciation of dollar 100 million, capital expenditures of dollar 230 million, and an increase in net operating working capital of dollar 150 million. What is its Free Cash Flow (FCF)?
What is the primary difference between Economic Value Added (EVA) and accounting net income?
What is the key difference between a Traditional IRA and a Roth IRA regarding tax treatment?
How does the U.S. tax system treat interest paid by a corporation versus dividends paid by a corporation?
A corporation receives dollar 10,000 in dividend income from another corporation's stock. If the receiving corporation's marginal tax rate is 40 percent, and 70 percent of dividends received are excluded from taxable income, what is the after-tax amount of the dividend income?
What is a corporate loss carryback and carryforward provision designed to do?
What is the primary advantage for a small business to elect S corporation status?
A single individual has a taxable income of dollar 40,000. Based on the 2017 tax brackets where the rate is 10 percent up to dollar 9,325, 15 percent up to dollar 37,950, and 25 percent above that, what is her marginal tax rate?
An investor purchases a stock for dollar 50 and sells it 18 months later for dollar 60. How is the dollar 10 profit per share taxed?
Why do analysts and managers often calculate EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization)?
What does a negative Free Cash Flow (FCF) typically indicate for a company?
Market Value Added (MVA) is calculated as the difference between which two values?
Which of the following activities would be classified under 'Investing Activities' on the statement of cash flows?
A firm needs to earn dollar 1.67 of pretax income to pay dollar 1.00 of dividends. What is the firm's marginal tax rate?
Company X had taxable income of dollar 2 million in 2016. In 2018, it experienced a net operating loss of dollar 12 million. The company's tax rate is 40 percent. What is the total tax refund the company will receive in 2019 from carrying back its 2018 loss to 2016 and 2017 (assuming 2017 income was also dollar 2 million)?
Which statement best describes the difference in how book values and market values are treated on a company's balance sheet?
What is Net Operating Profit After Taxes (NOPAT)?
A single individual has a taxable income of dollar 40,000. Her tax liability is calculated as dollar 5,738.75. What is her average tax rate?
Which of the following describes a progressive tax system, like the one for individuals in the United States?
In the summary section of the Statement of Cash Flows for Allied Food Products in 2018, the beginning cash balance was dollar 80 million and the ending cash balance was dollar 10 million. What was the net decrease in cash for the year?
What is the primary information conveyed by the Statement of Stockholders' Equity?
Why is it important for financial analysts to differentiate between operating and non-operating income on an income statement?
What is the primary purpose of the Alternative Minimum Tax (AMT) for individuals?
If a corporation had an operating loss in 2018, how can it use this loss for tax purposes?
Why might a rapidly growing company have a negative Free Cash Flow (FCF)?
Which of the following is an example of an 'operating activity' on the Statement of Cash Flows?
What does a positive Market Value Added (MVA) indicate?
If a company uses accelerated depreciation for tax purposes instead of straight-line depreciation, what is the most likely impact on its free cash flow in the early years of a project's life?
Why do managers and investors need to be cautious when reviewing financial statements, even if they follow GAAP?
From the perspective of a corporation that is an investor, why does the tax system favor receiving income from dividends over receiving income from interest?
What is the primary difference between total liabilities and total debt on a balance sheet?
A corporation with a 40 percent tax rate needs to make a dollar 100 dividend payment. How much pretax income must it generate to make this payment?