Arlington Corporation's financial statements (dollars and shares are in millions) are provided here.
Balance Sheets as of December 31 2019 2018 Assets Cash and equivalents$ 13,000 $ 11,000 Accounts receivable 35,000 30,000 Inventories 33,920 29,000 Total current assets$ 81,920 $ 70,000 Net plant and equipment 49,000 47,000 Total assets$130,920 $117,000 Liabilities and Equity Accounts payable$ 10,000 $ 8,000 Accruals 7,500 6,000 Notes payable 6,900 5,250 Total current liabilities$ 24,400 $ 19,250 Long-term bonds 20,000 20,000 Total liabilities$ 44,400 $ 39,250 Common stock (4,000 shares) 50,000 50,000 Retained earnings 36,520 27,750 Common equity$ 86,520 $ 77,750 Total liabilities and equity$130,920 $117,000 Income Statement for Year Ending December 31, 2019 Sales$194,000 Operating costs excluding depreciation and amortization 150,000 EBITDA$ 44,000 Depreciation & amortization 3,000 EBIT$ 41,000 Interest 2,550 EBT$ 38,450 Taxes (25%) 9,612.50 Net income$ 28,837.50 Dividends paid 20,067.50 Enter your answers in millions. For example, an answer of $25,000,000,000 should be entered as 25,000. Round your answers to the nearest whole number, if necessary.

1. What was net operating working capital for 2018 and 2019? Assume that all cash is excess cash; i.e., this cash is not needed for operating purposes.
2018$ million2019$ million
2.What was Arlington's 2019 free cash flow?
$ million
3. Construct Arlington's 2019 statement of stockholders' equity.
Statement of Stockholders' Equity, 2019 Common Stock Retained
Earnings Total Stockholders'
Equity Shares Amount Balances, 12/31/18 million$ million$ million$ million2019 Net Income millionCash Dividends millionAddition to retained earnings millionBalances, 12/31/19 million$ million$ million$ million
4. What was Arlington's 2019 EVA? Assume that its after-tax cost of capital is 10%. Round your answer to the nearest cent.
$ million
5. What was Arlington's MVA at year-end 2019? Assume that its stock price at December 31, 2019 was $25. Round your answer to the nearest cent.
$ million

3) Statement of stockholder' equity: Common equity: 2019 2018: 50,000 50,000, Retained Earnings: 2019 2018 27,750 36,521 Stockholders equity: 2019 2018 77,750 86,521

4) EVA: $21,063

5) MVA: $13,480

Explanation:

1) Net Working Capital = Cash + Accounts receivable + Inventories - Accounts payable - Notes payable - Accruals

2019: 13,000 + 35,000 + 33,920 - 10,000 - 7,500 - 6,900 = 57,520

2018: 11,000 + 30,000 + 29,000 - 8,000 - 6,000 - 5,250 = 50,750

2) Free Cash Flow = Net Income + Non cash changes (Depreciation etc) + Interest * (1- tax rate) - fixed capital investment - working capital changes

2019 Free cash flow: 28,838 + 3,000 + 2,550 (1 - 25%) - 5,000* - 6,420** = 22,300

* We have to calculate the fixed capital investment by working among opening & closing balance of plant & equipment and depreciation charge as follows:

Closing balance = Opening balance + Addition - Depreciation

Now we have been provided all balances in above equation except for addition so we can calculate the balance of additions during the year as follows:

Addition = Closing balance - Opening balance + Depreciation

Addition = 49,000 - 47,000 + 3,000

*Addition = 5,000

** Working capital changes = 2019 balance of (Accounts receivable + Inventories - Accounts payable - Accruals) - 2018 balance of (Accounts receivable + Inventories - Accounts payable - Accruals)

Working capital changes = (35,000 + 33,920 - 10,000 - 7,500) - (30,000 + 29,000 - 8,000 - 6,000)

Working capital changes = 51,420 - 45,000 = 6,420

3) Statement of Stockholders' Equity

Refer attached file for statement of changes in Equity

4) Economic Value Added (EVA): EBIT * (1 - Tax rate) - Cost of capital * Total capital

EVA = 41,000 * (1 - 25%) - (10% * 77,750)

EVA = 28,838 - 7,775

EVA = 21,063

5) Market Value Added = Market Value - Total Capital

MVA = (25 * 5,000) - 86,520

MVA = 13,480