You have just obtained financial information for the past 2 years for Powell Panther Corpora-

Free cash flow tion. Answer the following questions.

Powell Panther Corporation: Income Statements for Year Ending December 31

(Millions of Dollars)

2002 2001

$ 180.0 $ 150.0 30.0 25.0

$ 150.0 $ 125.0 21.7 20.2

$ 128.3 $ 104.8 51.3 41.9

$ 77.0 $ 62.9 Sales $1,200.0 $1,000.0 Operating costs excluding depreciation and amortization 1,020.0 850.0 EBITDA Depreciation and amortization Earnings before interest and taxes Less: Interest Earnings before taxes Taxes (40%)

Net income available to common stockholders Common dividends $ 60.5 $ 46.4 Powell Panther Corporation: Balance Sheets as of December 31 (Millions of Dollars)

2002 2001 Assets Cash and marketable securities Accounts receivable Inventories Total current assets Net plant and equipment Total assets Liabilities and Equity Accounts payable Notes payable Accruals Total current liabilities Long-term bonds Total debt Common stock (50 million shares)

Retained earnings Common equity Total liabilities and equity

a. What is the net operating profit after taxes (NC)PAT) for 2002?

1). What are the amounts of net operating working capital for 2001 and 2002?

$ 12.0 $ 10.0 180.0 150.0 180.0 200.0

$372.0 $360.0 300.0 250.0

$672.0 $610.0

$108.0 $ 90.0 67.0 51.5 72.0 60.0

$247.0 $201.5 150.0 150.0

$397.0 $351.5 50.0 50.0 225.0 208.5

$275.0 $258.5

$672.0 $610.0 68 CHAPTER

c. What .ire the amounts of total operating capital for 2001 and 2002?

d. What is the tree cash flow for 2002?

e. How can you explain the large increase in dividends in 2002