2007 Powell Panther Corporation: Balance Sheets as of December 31 (Millions of Dollars) 2008 Assets Cash and equivalents $ 120 Accounts receivable 180.0 Inventories 180.0 Total current assets $3720 Net plant and equipment 300.0 Total assets $672.0 $ 10,0 150.0 200.0 $360,0 250.0 $610.0 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 $108.0 67.0 72.0 $247.0 150.0 $397.0 50.0 225.0 $2750 $672.0 $ 90.0 51.5 60.0 $201.5 150.0 $351.5 50.0 208.5 $258.5 $6100 a. What was net working capital for 2007 and 2008? b. What was the 2008 free cash flow? c. How would you explain the large increase in 2008 dividends? IPREHENSIVE/SPREADSHEET PROBLEM 3-11 FINANCIAL STATEMENTS, CASH FLOW, AND TAXES Laiho Industries' 2007 and 2008 bal. ance sheets (in thousands of dollars) are shown 2008 2007 Cash $102,850 $ 89,725 Accounts receivable 103,365 85,527 Inventories 38 444 34982 Total current assets $244,659 $210,234 Net fixed assets 67,165 42,436 Total assets $311,824 $252,670 Accounts payable $ 30,761 $ 23,109 Accruals 30,477 22,656 Notes payable 16,717 14,217 Total current liabilities $ 77.955 $ 59,982 Long-term debt 76,264 63.914 Total liabilities $154,219 $123,896 Common stock 100,000 90,000 Retained earnings 57,605 38,774 Total common equity $157,605 $128,774 Total liabilities and equity $311,824 $252,670 a. Sales for 2008 were $455,150,000, and EBITDA was 15% of sales. Furthermore, deprecia- tion and amortization were 11% of net fixed assets, interest was $8,575,000, the corporate tax rate was 40%, and Laiho pays 40% of its net income in dividends. Given this informa- tion, construct the firm's 2006 income statement. b. Construct the statement of stockholders' equity for the year ending December 31, 2008, and the 2008 statement of cash flows. Calculate 2007 and 2008 net working capital and 2008 free cash flow. d. If Laiho increased its dividend payout ratio, what effect would this have on corporate taxes paid? What effect would this have on taxes paid by the company's shareholders? 2007 Powell Panther Corporation: Balance Sheets as of December 31 (Millions of Dollars) 2008 Assets Cash and equivalents $ 120 Accounts receivable 180.0 Inventories 180.0 Total current assets $3720 Net plant and equipment 300.0 Total assets $672.0 $ 10,0 150.0 200.0 $360,0 250.0 $610.0 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 $108.0 67.0 72.0 $247.0 150.0 $397.0 50.0 225.0 $2750 $672.0 $ 90.0 51.5 60.0 $201.5 150.0 $351.5 50.0 208.5 $258.5 $6100 a. What was net working capital for 2007 and 2008? b. What was the 2008 free cash flow? c. How would you explain the large increase in 2008 dividends? IPREHENSIVE/SPREADSHEET PROBLEM 3-11 FINANCIAL STATEMENTS, CASH FLOW, AND TAXES Laiho Industries' 2007 and 2008 bal. ance sheets (in thousands of dollars) are shown 2008 2007 Cash $102,850 $ 89,725 Accounts receivable 103,365 85,527 Inventories 38 444 34982 Total current assets $244,659 $210,234 Net fixed assets 67,165 42,436 Total assets $311,824 $252,670 Accounts payable $ 30,761 $ 23,109 Accruals 30,477 22,656 Notes payable 16,717 14,217 Total current liabilities $ 77.955 $ 59,982 Long-term debt 76,264 63.914 Total liabilities $154,219 $123,896 Common stock 100,000 90,000 Retained earnings 57,605 38,774 Total common equity $157,605 $128,774 Total liabilities and equity $311,824 $252,670 a. Sales for 2008 were $455,150,000, and EBITDA was 15% of sales. Furthermore, deprecia- tion and amortization were 11% of net fixed assets, interest was $8,575,000, the corporate tax rate was 40%, and Laiho pays 40% of its net income in dividends. Given this informa- tion, construct the firm's 2006 income statement. b. Construct the statement of stockholders' equity for the year ending December 31, 2008, and the 2008 statement of cash flows. Calculate 2007 and 2008 net working capital and 2008 free cash flow. d. If Laiho increased its dividend payout ratio, what effect would this have on corporate taxes paid? What effect would this have on taxes paid by the company's shareholders