3-13 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) 2005 2004 Sales Operating costs excluding $1,200.0 $1,000.0 depreciation and amortization EBITDA Depreciation and amortization Earnings before interest and taxes Interest Earnings before taxes Taxes (40%) Net income 1,020.0 180.0 30.0 s 150.0 21.7 S 128.3 51.3 $77.0 850.0 150.0 25.0 $125.0 20.2 $ 104.8 41.9 $62.9 $ 46.4 Common dividends $ 60.5 Powell Panther Corporation: Balance Sheets as of December 31 (Millions of Dollars) 2005 2004 Assets Cash and equivalents Accounts receivable Inventories S 12.0 180.0 180.0 $372.0 300.0 $672.0 10.0 150.0 200.0 $360.0 250.0 $610.0 Total current assets Net plant and equipment Total assets Liabilities and Equity Accounts payable Notes payable Accruals $108.0 67.0 72.0 $247.0 150.0 $397.0 50.0 225.0 $275.0 $672.0 $90.0 51.5 60.0 $201.5 150.0 $351.5 50.0 208.5 $258.5 $610.0 Total current liabilities Long-term bonds Total debt Common stock (50 million shares) Retained earnings Common equity Total liabilities and equity a. What was the 2005 NOPAT? b. What were the 2004 and 2005 net operating working capital? c. What were the 2004 and 2005 total operating capital? d. What was the 2005 free cash flow? e. How would you explain the large increase in 2005 dividends