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 | $ | 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.
- 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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