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 Sony’s only non-cash item being depreciation, calculate the following:
• Sony’s net income after taxes (NEAT) for the year? (5 marks)
• Sony’s Net Operating Profit After Taxes (NOPAT)? (5 marks)
• Sony’s 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 Sony’s sales revenue? (10 marks)
• If total net operating capital was ¥ 75 million for the previous year (2018), what was Sony’s Free Cash Flow (FCF) in 2019? (10 marks)