Excel Activity: Financial Statements, Cash Flow, and Taxes Laiho Industries’s 2020 and 2021…

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Excel Activity: Financial Statements, Cash Flow, and Taxes

Laiho Industries’s 2020 and 2021 balance sheets (in thousands of dollars) are shown.

Laiho Industries: Balance Sheets as of December 31 (thousands of dollars)
2021 2020
Cash $ 106,379 $ 89,810
Accounts receivable 103,477 84,533
Inventories 40,197 36,892
Total current assets $ 250,053 $ 211,235
Net fixed assets 68,796 42,791
Total assets $ 318,849 $ 254,026
Accounts payable $ 30,484 $ 22,410
Accruals 29,583 21,985
Notes payable 18,322 15,602
Total current liabilities $ 78,389 $ 59,997
Long-term debt 78,783 65,133
Total liabilities $ 157,172 $ 125,130
Common stock 104,500 92,000
Retained earnings 57,177 36,896
Total common equity $ 161,677 $ 128,896
Total liabilities and equity $ 318,849 $ 254,026

Perform the required analysis to answer the questions below. Do not round intermediate calculations. Enter your answers in thousands. For example, an answer of $1 thousand should be entered as 1, not 1,000. Round your answers to the nearest whole number. Use a minus sign to enter negative values, if any.

  1. Sales for 2021 were $454,150,000, and EBITDA was 16% of sales. Furthermore, depreciation and amortization were 19% of net fixed assets, interest was $8,329,000, the corporate tax rate was 25%, and Laiho pays 47.25% of its net income as dividends. Given this information, construct the firm’s 2021 income statement.

    Laiho Industries: Income Statement for Year Ending December 31, 2021 (thousands of dollars)
    2021
    Sales
    Operating costs excluding depreciation and amortization
    EBITDA
    Depreciation and amortization
    EBIT
    Interest
    EBT
    Taxes (25%)
    Net income
    Common dividends
    Addition to retained earnings

  2. Construct the statement of stockholders’ equity for the year ending December 31, 2021, and the 2021 statement of cash flows.

    Laiho Industries: Statement of Stockholders’ Equity, December 31, 2021 (thousands of dollars)
    Common Stock Retained Earnings Total Stockholders’ Equity
    Balances, December 31, 2020
    Common stock issue
    2021 Net income
    Cash dividends
    Addition to retained earnings
    Balances, December 31, 2021
    Laiho Industries: Statement of Cash Flows for 2021 (thousands of dollars)
    2021
    Operating Activities
    Net income
    Depreciation and amortization
    Increase in accounts payable
    Increase in accruals
    Increase in accounts receivable
    Increase in inventories
    Net cash provided by operating activities
    Investing Activities
    Additions to property, plant, and equipment
    Net cash used in investing activities
    Financing Activities
    Increase in notes payable
    Increase in long-term debt
    Increase in common stock
    Payment of common dividends
    Net cash provided by financing activities
    Summary
    Net increase/decrease in cash
    Cash at the beginning of the year
    Cash at the end of the year

    Calculate 2020 and 2021 net operating working capital (NOWC) and 2021 free cash flow (FCF). Assume the firm has no excess cash.

  3. NOWC2020: $

    NOWC2021: $

    FCF2021: $

  4. If Laiho increased its dividend payout ratio, what effect would this have on corporate taxes paid? What effect would this have on taxes paid by the company’s shareholders?

    If Laiho increased its dividend payout ratio, the firm would pay _________(more less the same) amount of corporate taxes and the company’s shareholders would pay _________(more less the same) amount of taxes on the dividends they would receive.

  5. Assume that the firm’s after-tax cost of capital is 10.5%. What is the firm’s 2021 EVA?

    $

  6. Assume that the firm’s stock price is $22 per share and that at year-end 2021 the firm has 10 million shares outstanding. What is the firm’s MVA at year-end 2021?

    $