$3-14$ Free Cash FLOW Arlington Corporation$$s financial statements $($dollars and shares are in millions$)$ are provided here.

Balance sheets as of December $31$

$20212020$

Assets

Cash and equivalents $$15,000$ $$14,000$

Accounts receivable $35,00030,000$

Inventories $33,32027,000$

Total current assets $$83,320$ $$71,000$

Net plant and equipment $48,00046,000$

Total assets $$131,320$ $$117,000$

Liabilities and Equity

Accounts payable $$10,100$ $$9,000$

Accruals $8,0006,000$

Notes payable $7,0005,050$

Total current liabilities $$25,100$ $$20,050$

Long$-$term bonds $20,00020,000$

Total liabilities $$45,100$ $$40,050$

Common stock $(4,000$ shares$)40,00040,000$

Retained earnings $46,22036,950$

Common equity $$86,220$ $$76,950$

Total liabilities and equity $$131,320$ $$117,000$

Income statement for Year ending December $31,2021$

Sales $$210,000$

Operating costs excluding depreciation and amortization $160,000$

EBITDA $$50,000$

Depreciation and amortization $6,000$

EBIT $$44,000$

Interest $5,350$

EBT $$38,650$

Taxes $(25\%)9,663$

Net income $$28,988$

Dividends paid $$19,718$

a$.$ What was net operating working capital for $2020$ and $2021?$ Assume that all cash is excess cash; i$.$e$.,$ this cash is not needed for operating purposes.

b$.$ What was Arlington$$s $2021$ free cash flow?

c$.$ Construct Arlington$$s $2021$ statement of stockholders$$ equity.

d$.$ What was Arlington$$s $2021$ EVA? Assume that its after$-$tax cost of capital is $10\%.$

e$.$ What was Arlington$$s MVA

$3-17$ Free Cash FLOW Financial information for Powell Panther Corporation is shown here.

Powell Panther Corporation: Income statements for Year ending December $31($millions of dollars$)$

$20212020$

Sales $$1,200\mathrm{.}0$ $$1,000\mathrm{.}0$

Operating costs excluding depreciation and amortization $1,020\mathrm{.}0850\mathrm{.}0$

EBITDA $$180\mathrm{.}0$ $$150\mathrm{.}0$

Depreciation and amortization $30\mathrm{.}025\mathrm{.}0$

Earnings before interest and taxes $($EBIT$)$ $$150\mathrm{.}0$ $$125\mathrm{.}0$

Interest $21\mathrm{.}720\mathrm{.}2$

Earnings before taxes $($EBT$)$ $$128\mathrm{.}3$ $$104\mathrm{.}8$

Taxes $(25\%)32\mathrm{.}126\mathrm{.}2$

Net income $$96\mathrm{.}2$ $$78\mathrm{.}6$

Common dividends $$79\mathrm{.}7$ $$61\mathrm{.}3$

Powell Panther Corporation: Balance sheets as of December $31($millions of dollars$)$

$20212020$

Assets

Cash and equivalents $$12\mathrm{.}0$ $$10\mathrm{.}0$

Accounts receivable $180\mathrm{.}0150\mathrm{.}0$

Inventories $180\mathrm{.}0200\mathrm{.}0$

Total current assets $$372\mathrm{.}0$ $$360\mathrm{.}0$

Net plant and equipment $300\mathrm{.}0250\mathrm{.}0$

Total assets $$672\mathrm{.}0$ $$610\mathrm{.}0$

Liabilities and Equity

Accounts payable $$108\mathrm{.}0$ $$90\mathrm{.}0$

Accruals $72\mathrm{.}060\mathrm{.}0$

Notes payable $67\mathrm{.}051\mathrm{.}5$

Total current liabilities $$247\mathrm{.}0$ $$201\mathrm{.}5$

Powell Panther Corporation: Balance sheets as of December $31($millions of dollars$)$

$20212020$

Long$-$term bonds $150\mathrm{.}0150\mathrm{.}0$

Total liabilities $$397\mathrm{.}0$ $$351\mathrm{.}5$

Common stock $(50$ million shares$)50\mathrm{.}050\mathrm{.}0$

Retained earnings $225\mathrm{.}0208\mathrm{.}5$

Common equity $$275\mathrm{.}0$ $$258\mathrm{.}5$

Total liabilities and equity $$672\mathrm{.}0$ $$610\mathrm{.}0$

a$.$ What was the net operating working capital for $2020$ and $2021?$ Assume the firm has no excess cash.

b$.$ What was the $2021$ free cash flow?

c$.$ How would you explain the large increase in $2021$ dividends?