Problem $2-12$

Free Cash Flows

Rhodes Corporation: Income Statements for Year Ending December $31($Millions of Dollars$)$

$20162015$

Sales $$7,150\mathrm{.}0$ $$5,500\mathrm{.}0$

Operating costs excluding depreciation $6,078\mathrm{.}04,675\mathrm{.}0$

Depreciation and amortization $182\mathrm{.}0165\mathrm{.}0$

Earnings before interest and taxes $$890\mathrm{.}0$ $$660\mathrm{.}0$

Less Interest $154\mathrm{.}0118\mathrm{.}0$

Pre$-$tax income $$736\mathrm{.}0$ $$542\mathrm{.}0$

Taxes $(40\%)294\mathrm{.}4216\mathrm{.}8$

Net income available to common stockholders $$441\mathrm{.}6$ $$325\mathrm{.}2$

Common dividends $$397\mathrm{.}0$ $$260\mathrm{.}0$

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

$20162015$

Assets

Cash $$108\mathrm{.}0$ $$83\mathrm{.}0$

Short$-$term investments $36\mathrm{.}028\mathrm{.}0$

Accounts receivable $1,073\mathrm{.}0825\mathrm{.}0$

Inventories $1,573\mathrm{.}01,210\mathrm{.}0$

Total current assets $$2,790\mathrm{.}0$ $$2,146\mathrm{.}0$

Net plant and equipment $1,815\mathrm{.}01,650\mathrm{.}0$

Total assets $$4,605\mathrm{.}0$ $$3,796\mathrm{.}0$

Liabilities and Equity

Accounts payable $$688\mathrm{.}0$ $$550\mathrm{.}0$

Accruals $396\mathrm{.}0330\mathrm{.}0$

Notes payable $143\mathrm{.}0110\mathrm{.}0$

Total current liabilities $$1,227\mathrm{.}0$ $$990\mathrm{.}0$

Long$-$term debt $1,430\mathrm{.}01,100\mathrm{.}0$

Total liabilities $$2,657\mathrm{.}0$ $$2,090\mathrm{.}0$

Common stock $1,805\mathrm{.}41,608\mathrm{.}0$

Retained earnings $142\mathrm{.}698\mathrm{.}0$

Total common equity $$1,948\mathrm{.}0$ $$1,706\mathrm{.}0$

Total liabilities and equity $$4,605\mathrm{.}0$ $$3,796\mathrm{.}0$

Using Rhodes Corporation's financial statements $($shown above$),$ answer the following questions.

What is the net operating profit after taxes $($NOPAT$)$ for $2016?$ Enter your answer in millions. For example, an answer of $$1\mathrm{.}2$ million should be entered as $1\mathrm{.}2,$ not $1,200,000.$ Round your answer to one decimal place.

$

$1\mathrm{.}548$

million

What are the amounts of net operating working capital for both years? Enter your answer in millions. For example, an answer of $$1\mathrm{.}2$ million should be entered as $1\mathrm{.}2,$ not $1,200,000.$ Round your answers to one decimal place.

$2016$ $

$1\mathrm{.}527$

million

$2015$ $

$1\mathrm{.}128$

million

What are the amounts of total net operating capital for both years? Enter your answer in millions. For example, an answer of $$1\mathrm{.}2$ million should be entered as $1\mathrm{.}2,$ not $1,200,000.$ Round your answers to one decimal place.

$2016$ $

$3\mathrm{.}378$

million

$2015$ $

$2\mathrm{.}806$

million

What is the free cash flow for $2016?$ Enter your answer in millions. For example, an answer of $$1\mathrm{.}2$ million should be entered as $1\mathrm{.}2,$ not $1,200,000.$ Round your answer to one decimal place.

$

$224\mathrm{.}6$

million

What is the ROIC for $2016?$ Round your answer to two decimal places.

$2\mathrm{.}29$

$\%$

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 answer in millions. For example, an answer of $$1\mathrm{.}2$ million should be entered as $1\mathrm{.}2,$ not $1,200,000.$ Round your answers to one decimal place.

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