Powell Panther Corporation: Income Statements for Year Ending December 31 (Millions of Dollars)

	2019		2018
Sales	$	1,820.0	$	1,400.0
Operating costs excluding depreciation and amortization		1,547.0		1,190.0
EBITDA	$	273.0	$	210.0
Depreciation and amortization		46.0		36.0
Earnings before interest and taxes (EBIT)	$	227.0	$	174.0
Interest		40.0		30.8
Earnings before taxes (EBT)	$	187.0	$	143.2
Taxes (25%)		74.8		57.3
Net income	$	112.2	$	85.9
Common dividends	$	101.0	$	68.7

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

	2019		2018
Assets
Cash and equivalents	$	17.0	$	14.0
Accounts receivable		273.0		210.0
Inventories		322.0		280.0
Total current assets	$	612.0	$	504.0
Net plant and equipment		455.0		364.0
Total assets	$	1,067.0	$	868.0
Liabilities and Equity
Accounts payable	$	123.0	$	98.0
Accruals		67.0		56.0
Notes payable		36.4		28.0
Total current liabilities	$	226.4	$	182.0
Long-term bonds		364.0		280.0
Total liabilities	$	590.4	$	462.0
Common stock		439.6		380.2
Retained earnings		37.0		25.8
Common equity	$	476.6	$	406.0
Total liabilities and equity	$	1,067.0	$	868.0

Write out your answers completely. For example, 25 million should be entered as 25,000,000. Round your answers to the nearest dollar, if necessary. Negative values, if any, should be indicated by a minus sign.

1. What was net operating working capital for 2018 and 2019? Assume the firm has no excess cash.

   2018: $

   2019: $

2. What was the 2019 free cash flow?

   $

3. How would you explain the large increase in 2019 dividends?

   1. The large increase in net income from 2018 to 2019 explains the large increase in 2019 dividends.
   2. The large increase in EBIT from 2018 to 2019 explains the large increase in 2019 dividends.
   3. The large increase in free cash flow from 2018 to 2019 explains the large increase in 2019 dividends.
   4. The large increase in sales from 2018 to 2019 explains the large increase in 2019 dividends.
   5. The large increase in retained earnings from 2018 to 2019 explains the large increase in 2019 dividends.