# Economic Value Added (EVA) Assignment | Homework For You

Here are simplified financial statements for Watervan Corporation:

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Economic Value Added (EVA) Assignment | Homework For You
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 INCOME STATEMENT (Figures in \$ millions) Net sales \$ 899.00 Cost of goods sold 759.00 Depreciation 49.00 Earnings before interest and taxes (EBIT) \$ 91.00 Interest expense 30.00 Income before tax \$ 61.00 Taxes 21.35 Net income \$ 39.65

 BALANCE SHEET (Figures in \$ millions) End of Year Start of Year Assets Current assets \$ 387 \$ 348 Long-term assets 294 240 Total assets \$ 681 \$ 588 Liabilities and shareholders’ equity Current liabilities \$ 212 \$ 175 Long-term debt 126 139 Shareholders’ equity 343 274 Total liabilities and shareholders’ equity \$ 681 \$ 588

The company’s cost of capital is 9%.

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?

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