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	$	13,000		$	11,000
Operating costs excluding depreciation		11,652			9,740
Depreciation and amortization		360			320
Earnings before interest and taxes	$	988		$	940
Less interest		220			200
Pre-tax income	$	768		$	740
Taxes (25%)		192			185
Net income available to common stockholders	$	576		$	555
Common dividends	$	205		$	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		2,050			1,800
Total current assets	$	5,570		$	5,000
Net plant and equipment		3,750			3,500
Total assets	$	9,320		$	8,500
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		5,221			5,100
Retained earnings		1,171			800
Total common equity	$	6,392		$	5,900
Total liabilities and equity	$	9,320		$	8,500

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