Problem 2-12 Free Cash Flows Rhodes Corporation: Income Statements for Year Ending December 31 (Millions of Dollars) 2016 2015 Sales $10,000.0 $8,000.0 Operating costs excluding depreciation 8,500.0 6,800.0 Depreciation and amortization 239.0 184.0 Earnings before interest and taxes $1,261.0 $1,016.0 Less Interest 215.0 172.0 Pre-tax income $1,046.0 $844.0 Taxes (40%) 418.4 337.6 Net income available to common stockholders $627.6 $506.4 Common dividends $565.0 $405.0 Rhodes Corporation: Balance Sheets as of December 31 (Millions of Dollars) 2016 2015 Assets Cash $132.0 $120.0 Short-term investments 50.0 40.0 Accounts receivable 1,012.0 880.0 Inventories 1,380.0 1,200.0 Total current assets $2,574.0 $2,240.0 Net plant and equipment 2,392.0 1,840.0 Total assets $4,966.0 $4,080.0 Liabilities and Equity Accounts payable $644.0 $560.0 Accruals 600.0 480.0 Notes payable 200.0 160.0 Total current liabilities $1,444.0 $1,200.0 Long-term debt 2,000.0 1,600.0 Total liabilities $3,444.0 $2,800.0 Common stock 1,307.4 1,128.0 Retained earnings 214.6 152.0 Total common equity $1,522.0 $1,280.0 Total liabilities and equity $4,966.0 $4,080.0 Using Rhodes Corporation's financial statements (shown above), answer the following questions. a. What is the net operating profit after taxes (NOPAT) for 2016? Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answer to one decimal place. $ 6000 million b. What are the amounts of net operating working capital for both years? Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answers to one decimal place. 2016 $ 1680 million 2015 $ 1480 million c. What are the amounts of total net operating capital for both years? Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answers to one decimal place. 2016 $ 4122 million 2015 $ 3360 million d. What is the free cash flow for 2016? Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answer to one decimal place. 104.6 million $ e. What is the ROIC for 2016? Round your answer to two decimal places. 18.36 % f. 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 $1.2 million should be entered as 1.2, not 1,200,000. Round your answers to one decimal place. After-tax interest payment $ 129 million Reduction (increase) in debt 400 million Payment of dividends $ 565 million Repurchase (Issue) stock $ 272 million Purchase (Sale) of short-term $ million investments S 10
