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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 | $ | 10,000 | |
Operating costs excluding depreciation | 10,620 | 8,746 | |||
Depreciation and amortization | 360 | 310 | |||
Earnings before interest and taxes | $ | 1,020 | $ | 944 | |
Less interest | 160 | 100 | |||
Pre-tax income | $ | 860 | $ | 844 | |
Taxes (25%) | 215 | 211 | |||
Net income available to common stockholders | $ | 645 | $ | 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 | 120 | 100 | |||
Accounts receivable | 2,750 | 2,500 | |||
Inventories | 1,550 | 1,400 | |||
Total current assets | $ | 5,070 | $ | 4,600 | |
Net plant and equipment | 3,850 | 3,500 | |||
Total assets | $ | 8,920 | $ | 8,100 | |
Liabilities and Equity | |||||
Accounts payable | $ | 1,300 | $ | 1,200 | |
Accruals | 650 | 600 | |||
Notes payable | 190 | 100 | |||
Total current liabilities | $ | 2,140 | $ | 1,900 | |
Long-term debt | 1,300 | 1,200 | |||
Total liabilities | $ | 3,440 | 3,100 | ||
Common stock | 3,736 | 3,700 | |||
Retained earnings | 1,744 | 1,300 | |||
Total common equity | $ | 5,480 | $ | 5,000 | |
Total liabilities and equity | $ | 8,920 | $ | 8,100 |
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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