Question
Free Cash Flows Rhodes Corporation's financial statements are shown below. Rhodes Corporation: Income Statements for Year Ending December 31 (Millions of Dollars) 2022 2021 Sales
Free Cash Flows
Rhodes Corporation's financial statements are shown below.
Rhodes Corporation: Income Statements for Year Ending December 31 (Millions of Dollars)
2022 | 2021 | ||||
Sales | $ | 11,000 | $ | 10,000 | |
Operating costs excluding depreciation | 9,608 | 8,718 | |||
Depreciation and amortization | 320 | 310 | |||
Earnings before interest and taxes | $ | 1,072 | $ | 972 | |
Less interest | 280 | 200 | |||
Pre-tax income | $ | 792 | $ | 772 | |
Taxes (25%) | 198 | 193 | |||
Net income available to common stockholders | $ | 594 | $ | 579 | |
Common dividends | $ | 203 | $ | 200 |
Rhodes Corporation: Balance Sheets as of December 31 (Millions of Dollars)
2022 | 2021 | ||||
Assets | |||||
Cash | $ | 650 | $ | 600 | |
Short-term investments | 230 | 200 | |||
Accounts receivable | 2,750 | 2,500 | |||
Inventories | 1,950 | 1,800 | |||
Total current assets | $ | 5,580 | $ | 5,100 | |
Net plant and equipment | 3,650 | 3,500 | |||
Total assets | $ | 9,230 | $ | 8,600 | |
Liabilities and Equity | |||||
Accounts payable | $ | 1,300 | $ | 1,200 | |
Accruals | 650 | 600 | |||
Notes payable | 196 | 100 | |||
Total current liabilities | $ | 2,146 | $ | 1,900 | |
Long-term debt | 1,300 | 1,200 | |||
Total liabilities | $ | 3,446 | 3,100 | ||
Common stock | 4,393 | 4,500 | |||
Retained earnings | 1,391 | 1,000 | |||
Total common equity | $ | 5,784 | $ | 5,500 | |
Total liabilities and equity | $ | 9,230 | $ | 8,600 |
Suppose the federal-plus-state tax corporate tax is 25%. Answer the following questions.
What is the net operating profit after taxes (NOPAT) for 2022? 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.
2022: $ million
2021: $ 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.
2022: $ million
2021: $ million
What is the free cash flow for 2022? 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 2022? 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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