Ere are simplified financial statements for Watervan Corporation: INCOME STATEMENT
(Figures in $ millions)
Net sales $
888.00

Cost of goods sold
748.00

Depreciation
38.00

Earnings before interest and taxes (EBIT) $
102.00

Interest expense
19.00

Income before tax $
83.00

Taxes
17.43

Net income $
65.57

BALANCE SHEET
(Figures in $ millions)
End of Year Start of Year
Assets
Current assets $
376

$
326

Long-term assets
272

229

Total assets $
648

$
555

Liabilities and shareholders’ equity
Current liabilities $
201

$
164

Long-term debt
115

128

Shareholders’ equity
332

263

Total liabilities and shareholders’ equity $
648

$
555

The company’s cost of capital is 8.5%.

a. Calculate Watervan’s economic value added (EVA). (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.)

b. What is the company’s return on capital? (Use start-of-year rather than average capital.) (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

c. What is its return on equity? (Use start-of-year rather than average equity.) (Enter your answer as a percent rounded to 2 decimal places.)

d. Is the company creating value for its shareholders?

The balance sheet contains the following major sections: current assets long-term investments property, plant, and equipment intangible assets other assets current liabilities long-term liabilities contributed capital retained earnings accumulated other comprehensive income required: the following is a list of accounts. using the letters a through j, indicate in which section of the balance sheet each of the accounts would be classified. if an account does not belong under one of the sections listed, select "not under any of the choices" from the classification drop down box. for all accounts, indicate if the account is a contra account or an account that would normally be deducted on the balance sheet by selecting "yes" from the second drop down box, otherwise select "no". account classification contra or deducted (yes/no) 1. cash 2. bonds payable (due in 8 years) 3. machinery 4. deficit 5. unexpired insurance 6. franchise (net) 7. fund to retire preferred stock 8. current portion of mortgage payable 9. accumulated depreciation 10. copyrights 11. investment in held-to-maturity bonds 12. allowance for doubtful accounts 13. notes receivable (due in 3 years) 14. property taxes payable 15. deferred taxes payable 16. additional paid-in capital on preferred stock 17. premium on bonds payable (due in 8 years) 18. work in process 19. common stock, $1 par 20. land 21. treasury stock (at cost) 22. unrealized increase in value of available-for-sale securities

Taking commercial paper means the holder acts honestly

The face of a company is often that of the lowest paid employees who meet the customers. select one: true false