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Case B In 2019, Japanese electronic giant Sony Inc. had 16,5 million in operating...

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Accounting

  1. Case B

    In 2019, Japanese electronic giant Sony Inc. had 16,5 million in operating income (EBIT). With the huge demand for their products, Sony experienced a net depreciation expense of 3,3 million coupled with an interest expense of 2,2 million. Being subject to strict Japanese corporate tax, its corporate income tax was 40%. Furthermore, to maintain their competitive advantage over their rival Samsung, they maintain 44 million in operating current assets and 15,4 million in operating current liabilities; Sony keeps 49,5 million in net fixed assets. It estimates that it has a post-tax cost of capital of 10%

    Based on Sonys only non-cash item being depreciation, calculate the following:

    • Sonys net income after taxes (NEAT) for the year? (5 marks)

    • Sonys Net Operating Profit After Taxes (NOPAT)? (5 marks)

    • Sonys net operating working capital (WC) and total net operating capital for the current year? (10 marks)

    • If the Working Capital Ratio (WCR/sales) read 25% in 2019, what was Sonys sales revenue? (10 marks)

    • If total net operating capital was 75 million for the previous year (2018), what was Sonys Free Cash Flow (FCF) in 2019? (10 marks)

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