Question
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
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 | $ | 12,000 |
| $ | 10,000 |
| Operating costs excluding depreciation | 10,642 |
| 8,734 | ||
| Depreciation and amortization | 390 |
| 350 | ||
| Earnings before interest and taxes | $ | 968 |
| $ | 916 |
| Less interest | 240 |
| 200 | ||
| Pre-tax income | $ | 728 |
| $ | 716 |
| Taxes (25%) | 182 |
| 179 | ||
| Net income available to common stockholders | $ | 546 |
| $ | 537 |
| Common dividends | $ | 204 |
| $ | 200 |
Rhodes Corporation: Balance Sheets as of December 31 (Millions of Dollars)
|
| 2020 |
| 2019 | ||
| Assets | |||||
| Cash | $ | 550 |
| $ | 500 |
| Short-term investments | 220 |
| 200 | ||
| Accounts receivable | 2,750 |
| 2,500 | ||
| Inventories | 1,850 |
| 1,700 | ||
| Total current assets | $ | 5,370 |
| $ | 4,900 |
| Net plant and equipment | 3,650 |
| 3,500 | ||
| Total assets | $ | 9,020 |
| $ | 8,400 |
|
| |||||
| Liabilities and Equity | |||||
| Accounts payable | $ | 1,100 |
| $ | 1,000 |
| Accruals | 550 |
| 500 | ||
| Notes payable | 384 |
| 200 | ||
| Total current liabilities | $ | 2,034 |
| $ | 1,700 |
| Long-term debt | 1,100 |
| 1,000 | ||
| Total liabilities | $ | 3,134 |
| 2,700 | |
| Common stock | 4,344 |
| 4,500 | ||
| Retained earnings | 1,542 |
| 1,200 | ||
| Total common equity | $ | 5,886 |
| $ | 5,700 |
| Total liabilities and equity | $ | 9,020 |
| $ | 8,400 |
Suppose the federal-plus-state tax corporate tax is 25%. Answer the following questions.
- 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
- 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
- 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
- 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
- What is the ROIC for 2020? Round your answer to two decimal places.
%
- 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 |
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Modern Auditing And Assurance Services
Authors: Philomena Leung, Paul Coram, Barry J. Cooper, Peter Richardson
5th Edition
1742168450, 978-1742168456
