fm14 18 - 2.50 1.96 3.00 Flow Cash Free = Flow Cash...

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Mini Case: 14 - 18 h. Calculate SEC's forecasted ratios, and compare them with the company's 2007 ratios and with the industry averages. Calculate SEC’s forecasted free cash flow and return on invested capital (ROIC). Answer: Actual Forecast Key Ratios 2007 2008 Industry Profit Margin 2.70% 2.52% 4.00% ROE 7.71% 8.54% 15.60% DSO 43.80 43.80 32.00 Inventory Turnover 8.33 8.33 11.00 Fixed Asset Turnover 4.00 4.00 5.00 Debt/Assets 30.00% 40.98% 36.00% TIE 10.00 6.25 9.40 Current Ratio
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Unformatted text preview: 2.50 1.96 3.00 Flow Cash Free = Flow Cash Operating- Capital Operating in Investment Gross = NOPAT - Net Investment in Operating Capital FCF = NOPAT - (Operating Capital 2008- Operating Capital 2007 ) = $125(1 - 0.4) + [($625 - $125 + $625) - ($500 - $100 + $500) = $75 - ($1,125 - $900) = $75 - $225 = -$150. Note: Operating Capital = Net Operating Working Capital + Net Fixed Assets. ROIC = NOPAT / Capital = $75 / $1,125 = 0.067 = 6.67%....
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