Free Cash Flows

Rhodes Corporation's 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 11,592 9,676

Depreciation and amortization 400 380

Earnings before interest and taxes $ 1,008 $ 944

Less interest 160 100

Pre-tax income $ 848 $ 844

Taxes (25%) 212 211

Net income available to common stockholders $ 636 $ 633

Common dividends $ 201 $ 200

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

2020 2019

Assets

Cash $ 650 $ 600

Short-term investments 230 200

Accounts receivable 2,750 2,500

Inventories 1,850 1,700

Total current assets $ 5,480 $ 5,000

Net plant and equipment 3,850 3,500

Total assets $ 9,330 $ 8,500

Liabilities and Equity

Accounts payable $ 1,300 $ 1,200

Accruals 650 600

Notes payable 364 200

Total current liabilities $ 2,314 $ 2,000

Long-term debt 1,300 1,200

Total liabilities $ 3,614 3,200

Common stock 4,581 4,600

Retained earnings 1,135 700

Total common equity $ 5,716 $ 5,300

Total liabilities and equity $ 9,330 $ 8,500

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

a. 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

b. 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

c. 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

d. 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

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

%

f. 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