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28 Sep 2019
Problem 2-12
Free Cash Flows
Rhodes Corporation: Income Statements for Year EndingDecember 31 (Millions of Dollars)
2016 2015 Sales $7,800.0 $6,500.0 Operating costs excluding depreciation 6,630.0 5,525.0 Depreciation and amortization 226.0 189.0 Earnings before interest and taxes $944.0 $786.0 Less Interest 168.0 140.0 Pre-tax income $776.0 $646.0 Taxes (40%) 310.4 258.4 Net income available to common stockholders $465.6 $387.6 Common dividends $419.0 $310.0
Rhodes Corporation: Balance Sheets as of December 31(Millions of Dollars)
2016 2015 Assets Cash $118.0 $91.0 Short-term investments 40.0 33.0 Accounts receivable 930.0 715.0 Inventories 1,404.0 1,170.0 Total current assets $2,492.0 $2,009.0 Net plant and equipment 2,262.0 1,885.0 Total assets $4,754.0 $3,894.0 Liabilities and Equity Accounts payable $813.0 $650.0 Accruals 650.0 520.0 Notes payable 156.0 130.0 Total current liabilities $1,619.0 $1,300.0 Long-term debt 1,560.0 1,300.0 Total liabilities $3,179.0 $2,600.0 Common stock 1,412.4 1,178.0 Retained earnings 162.6 116.0 Total common equity $1,575.0 $1,294.0 Total liabilities and equity $4,754.0 $3,894.0
Using Rhodes Corporation's financial statements (shown above),answer the following questions.
- What is the net operating profit after taxes (NOPAT) for 2016?Enter your answer in millions. For example, an answer of $1.2million should be entered as 1.2, not 1,200,000. Round your answerto one decimal place.
$ million
- What are the amounts of net operating working capital for bothyears? Enter your answer in millions. For example, an answer of$1.2 million should be entered as 1.2, not 1,200,000. Round youranswers to one decimal place.
2016 $ million
2015 $ million
- What are the amounts of total net operating capital for bothyears? Enter your answer in millions. For example, an answer of$1.2 million should be entered as 1.2, not 1,200,000. Round youranswers to one decimal place.
2016 $ million
2015 $ million
- What is the free cash flow for 2016? Enter your answer inmillions. For example, an answer of $1.2 million should be enteredas 1.2, not 1,200,000. Round your answer to one decimalplace.
$ million
- What is the ROIC for 2016? Round your answer to two decimalplaces.
%
- How much of the FCF did Rhodes use for each of the followingpurposes: after-tax interest, net debt repayments, dividends, netstock repurchases, and net purchases of short-term investments?(Hint: Remember that a net use can be negative.) Enteryour answer in millions. For example, an answer of $1.2 millionshould be entered as 1.2, not 1,200,000. Round your answers to onedecimal place.
After-tax interest payment $ million Reduction (increase) in debt $ million Payment of dividends $ million Repurchase (Issue) stock $ million Purchase (Sale) of short-term investments $ million
Problem 2-12
Free Cash Flows
Rhodes Corporation: Income Statements for Year EndingDecember 31 (Millions of Dollars)
2016 | 2015 | ||
Sales | $7,800.0 | $6,500.0 | |
Operating costs excluding depreciation | 6,630.0 | 5,525.0 | |
Depreciation and amortization | 226.0 | 189.0 | |
Earnings before interest and taxes | $944.0 | $786.0 | |
Less Interest | 168.0 | 140.0 | |
Pre-tax income | $776.0 | $646.0 | |
Taxes (40%) | 310.4 | 258.4 | |
Net income available to common stockholders | $465.6 | $387.6 | |
Common dividends | $419.0 | $310.0 |
Rhodes Corporation: Balance Sheets as of December 31(Millions of Dollars)
2016 | 2015 | ||
Assets | |||
Cash | $118.0 | $91.0 | |
Short-term investments | 40.0 | 33.0 | |
Accounts receivable | 930.0 | 715.0 | |
Inventories | 1,404.0 | 1,170.0 | |
Total current assets | $2,492.0 | $2,009.0 | |
Net plant and equipment | 2,262.0 | 1,885.0 | |
Total assets | $4,754.0 | $3,894.0 | |
Liabilities and Equity | |||
Accounts payable | $813.0 | $650.0 | |
Accruals | 650.0 | 520.0 | |
Notes payable | 156.0 | 130.0 | |
Total current liabilities | $1,619.0 | $1,300.0 | |
Long-term debt | 1,560.0 | 1,300.0 | |
Total liabilities | $3,179.0 | $2,600.0 | |
Common stock | 1,412.4 | 1,178.0 | |
Retained earnings | 162.6 | 116.0 | |
Total common equity | $1,575.0 | $1,294.0 | |
Total liabilities and equity | $4,754.0 | $3,894.0 |
Using Rhodes Corporation's financial statements (shown above),answer the following questions.
- What is the net operating profit after taxes (NOPAT) for 2016?Enter your answer in millions. For example, an answer of $1.2million should be entered as 1.2, not 1,200,000. Round your answerto one decimal place.
$ million
- What are the amounts of net operating working capital for bothyears? Enter your answer in millions. For example, an answer of$1.2 million should be entered as 1.2, not 1,200,000. Round youranswers to one decimal place.
2016 $ million
2015 $ million
- What are the amounts of total net operating capital for bothyears? Enter your answer in millions. For example, an answer of$1.2 million should be entered as 1.2, not 1,200,000. Round youranswers to one decimal place.
2016 $ million
2015 $ million
- What is the free cash flow for 2016? Enter your answer inmillions. For example, an answer of $1.2 million should be enteredas 1.2, not 1,200,000. Round your answer to one decimalplace.
$ million
- What is the ROIC for 2016? Round your answer to two decimalplaces.
%
- How much of the FCF did Rhodes use for each of the followingpurposes: after-tax interest, net debt repayments, dividends, netstock repurchases, and net purchases of short-term investments?(Hint: Remember that a net use can be negative.) Enteryour answer in millions. For example, an answer of $1.2 millionshould be entered as 1.2, not 1,200,000. Round your answers to onedecimal place.
After-tax interest payment $ million Reduction (increase) in debt $ million Payment of dividends $ million Repurchase (Issue) stock $ million Purchase (Sale) of short-term investments $ million
Trinidad TremblayLv2
28 Sep 2019