Calculate the economic value added calculate the return on


The following table gives abbreviated balance sheets and income statements for Starbucks. At the end of fiscal 2014, Starbucks had 754 million shares outstanding with a share price of $82.15. The company's weighted-average cost of capital was about 9%. Assume a tax rate of 35%. Balance Sheet End of Year Start of Year Assets Current assets: Cash and marketable securities 1,904 3,240 Accounts receivable 1,008 845 Inventories 1,097 1,117 Other current assets 291 294 Total current assets 4,300 5,496 Fixed assets: Net fixed assets 3,531 3,219 Other long-term assets 3,070 2,851 Total assets 10,901 11,566 Liabilities and Shareholders' Equity Current liabilities: Accounts payable 2,250 1,946 Other current liabilities 807 3,426 Total current liabilities 3,057 5,372 Long-term debt 2,054 1,305 Other long-term liabilities 400 366 Total liabilities 5,511 7,043 Total shareholders' equity 5,390 4,523 Total liabilities and shareholders’ equity 10,901 11,566 Income Statement Net sales 16,454 Cost of goods sold 6,865 Selling, general, and administrative expenses 5,661 Depreciation 716 Earnings before interest and taxes (EBIT) 3,212 Interest expense 70 Taxable income 3,142 Tax 1,098 Net income 2,044 Dividends 789 Addition to retained earnings 1,255 (figures in $ millions) a. Calculate the market value added. (Do not round intermediate calculations. Enter your answer in millions rounded to 1 decimal place.) Market value added $ ______million b. Calculate the market-to-book ratio. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Market-to-book ratio_____ c. Calculate the economic value added. (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) Economic value added $ ______million d. Calculate the return on start-of-the-year capital. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Return on capital_____ %

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Financial Management: Calculate the economic value added calculate the return on
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