Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Check My Work eBook Free Cash Flows Rhodes Corporations financial statements are shown below. Rhodes Corporation: Income Statements for Year Ending December 31 (Millions of

  • Check My Work
  • eBook

Free Cash Flows

Rhodes Corporations financial statements are shown below.

Rhodes Corporation: Income Statements for Year Ending December 31 (Millions of Dollars)

2020 2019
Sales $ 11,000 $ 10,000
Operating costs excluding depreciation 9,624 8,752
Depreciation and amortization 360 340
Earnings before interest and taxes $ 1,016 $ 908
Less interest 280 200
Pre-tax income $ 736 $ 708
Taxes (25%) 184 177
Net income available to common stockholders $ 552 $ 531
Common dividends $ 202 $ 200

Rhodes Corporation: Balance Sheets as of December 31 (Millions of Dollars)

2020 2019
Assets
Cash $ 550 $ 500
Short-term investments 110 100
Accounts receivable 2,750 2,500
Inventories 1,550 1,400
Total current assets $ 4,960 $ 4,500
Net plant and equipment 3,850 3,500
Total assets $ 8,810 $ 8,000
Liabilities and Equity
Accounts payable $ 1,100 $ 1,000
Accruals 550 500
Notes payable 174 100
Total current liabilities $ 1,824 $ 1,600
Long-term debt 1,100 1,000
Total liabilities $ 2,924 2,600
Common stock 4,636 4,500
Retained earnings 1,250 900
Total common equity $ 5,886 $ 5,400
Total liabilities and equity $ 8,810 $ 8,000

Suppose the federal-plus-state tax corporate tax is 25%. Answer the following questions.

  1. What is the net operating profit after taxes (NOPAT) for 2020? Enter your answer in millions. For example, an answer of $1 million should be entered as 1, not 1,000,000. Round your answer to the nearest whole number.

    $ million

  2. What are the amounts of net operating working capital for both years? Enter your answers in millions. For example, an answer of $1 million should be entered as 1, not 1,000,000. Round your answers to the nearest whole number.

    2020: $ million

    2019: $ million

  3. What are the amounts of total net operating capital for both years? Enter your answers in millions. For example, an answer of $1 million should be entered as 1, not 1,000,000. Round your answers to the nearest whole number.

    2020: $ million

    2019: $ million

  4. What is the free cash flow for 2020? Enter your answer in millions. For example, an answer of $1 million should be entered as 1, not 1,000,000. Cash outflow, if any, should be indicated by a minus sign. Round your answer to the nearest whole number.

    $ million

  5. What is the ROIC for 2020? Round your answer to two decimal places.

    %

  6. How much of the FCF did Rhodes use for each of the following purposes: after-tax interest, net debt repayments, dividends, net stock repurchases, and net purchases of short-term investments? (Hint: Remember that a net use can be negative.) Enter your answers in millions. For example, an answer of $1 million should be entered as 1, not 1,000,000. Round your answers to the nearest whole number.

    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

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Inside Private Equity

Authors: James M. Kocis, James C. Bachman IV, Austin M. Long III, Craig J. Nickels

1st Edition

0470421894, 978-0470421895

More Books

Students also viewed these Finance questions

Question

What is cloud computing, and why is it a game changer?

Answered: 1 week ago