Powell Panther Corporation: Income Statements for Year Ending December 31 (millions of dollars)

	2021		2020
Sales	$	1,375.0	$	1,100.0
Operating costs excluding depreciation and amortization		1,134.0		935.0
EBITDA	$	241.0	$	165.0
Depreciation and amortization		36.0		33.0
Earnings before interest and taxes (EBIT)	$	205.0	$	132.0
Interest		30.3		24.2
Earnings before taxes (EBT)	$	174.7	$	107.8
Taxes (25%)		69.9		43.1
Net income	$	104.8	$	64.7
Common dividends	$	94.3	$	51.8

Powell Panther Corporation: Balance Sheets as of December 31 (millions of dollars)

	2021		2020
Assets
Cash and equivalents	$	13.0	$	11.0
Accounts receivable		172.0		132.0
Inventories		230.0		209.0
Total current assets	$	415.0	$	352.0
Net plant and equipment		363.0		330.0
Total assets	$	778.0	$	682.0
Liabilities and Equity
Accounts payable	$	89.0	$	77.0
Accruals		109.0		99.0
Notes payable		27.5		22.0
Total current liabilities	$	225.5	$	198.0
Long-term bonds		275.0		220.0
Total liabilities	$	500.5	$	418.0
Common stock		247.6		244.6
Retained earnings		29.9		19.4
Common equity	$	277.5	$	264.0
Total liabilities and equity	$	778.0	$	682.0

1. What was net operating working capital for 2020 and 2021? Assume the firm has no excess cash.

   2020: $

   2021: $

2. What was the 2021 free cash flow?

   $

3. How would you explain the large increase in 2021 dividends?

   1. The large increase in net income from 2020 to 2021 explains the large increase in 2021 dividends.
   2. The large increase in EBIT from 2020 to 2021 explains the large increase in 2021 dividends.
   3. The large increase in free cash flow from 2020 to 2021 explains the large increase in 2021 dividends.
   4. The large increase in sales from 2020 to 2021 explains the large increase in 2021 dividends.
   5. The large increase in retained earnings from 2020 to 2021 explains the large increase in 2021 dividends.

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