Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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 $ 11,000
Operating costs excluding depreciation 10,622 9,742
Depreciation and amortization 350 330
Earnings before interest and taxes $ 1,028 $ 928
Less interest 220 200
Pre-tax income $ 808 $ 728
Taxes (25%) 202 182
Net income available to common stockholders $ 606 $ 546
Common dividends $ 204 $ 200

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

2020 2019
Assets
Cash $ 550 $ 500
Short-term investments 130 100
Accounts receivable 2,750 2,500
Inventories 1,650 1,600
Total current assets $ 5,080 $ 4,700
Net plant and equipment 3,650 3,500
Total assets $ 8,730 $ 8,200
Liabilities and Equity
Accounts payable $ 1,100 $ 1,000
Accruals 550 500
Notes payable 178 100
Total current liabilities $ 1,828 $ 1,600
Long-term debt 1,100 1,000
Total liabilities $ 2,928 2,600
Common stock 4,400 4,600
Retained earnings 1,402 1,000
Total common equity $ 5,802 $ 5,600
Total liabilities and equity $ 8,730 $ 8,200

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

Intermediate Financial Management

Authors: Brigham, Daves

10th Edition

978-1439051764, 1111783659, 9780324594690, 1439051763, 9781111783655, 324594690, 978-1111021573

More Books

Students also viewed these Finance questions

Question

305 mg of C6H12O6 in 55.2 mL of solution whats the molarity

Answered: 1 week ago