Problem 2 12 Free Cash Flows Rhodes Corporation Income Statements for Year Ending December 31 (Millions of Dollars) 2016 2015 Sales $4,025 0 $3,500 0 Operating costs excluding depreciation 3,220 0 2,975 0 Depreciation and amortization 96 0 77 0 Earnings before interest and taxes $709 0 $448 0 Less Interest 87 0 75 0 Pre tax income $622 0 $373 0 Taxes (40 ) 248 8 149 2 Net income available to common stockholders $373 2 $223 8 Common dividends $336 0 $179 0 Rhodes Corporation Balance Sheets as of December 31 (Millions of Dollars) 2016 2015 Assets Cash $51 0 $46 0 Short term investments 21 0 18 0 Accounts receivable 630 0 525 0 Inventories 788 0 630 0 Total current assets $1,490 0 $1,219 0 Net plant and equipment 963 0 770 0 Total assets $2,453 0 $1,989 0 Liabilities and Equity Accounts payable $455 0 $350 0 Accruals 154 0 140 0 Notes payable 81 0 70 0 Total current liabilities $690 0 $560 0 Long term debt 805 0 700 0 Total liabilities $1,495 0 $1,260 0 Common stock 853 8 662 0 Retained earnings 104 2 67 0 Total common equity $958 0 $729 0 Total liabilities and equity $2,453 0 $1,989 0 Using Rhodes Corporation's financial statements (shown above), answer the following questions 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 $ million 2015 $ million 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 $ million 2015 $ million 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 $ million What is the ROIC for 2016 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 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 $ 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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Problem 2-12 Free Cash Flows Rhodes Corporation: Income Statements for Year Ending December 31 (Millions of Dollars) 2016 2015 Sales $4,025.0 $3,500.0 Operating costs excluding

Problem 2-12 Free Cash Flows

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

	2016	2015
Sales	$4,025.0	$3,500.0
Operating costs excluding depreciation	3,220.0	2,975.0
Depreciation and amortization	96.0	77.0
Earnings before interest and taxes	$709.0	$448.0
Less Interest	87.0	75.0
Pre-tax income	$622.0	$373.0
Taxes (40%)	248.8	149.2
Net income available to common stockholders	$373.2	$223.8
Common dividends	$336.0	$179.0

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

	2016	2015
Assets
Cash	$51.0	$46.0
Short-term investments	21.0	18.0
Accounts receivable	630.0	525.0
Inventories	788.0	630.0
Total current assets	$1,490.0	$1,219.0
Net plant and equipment	963.0	770.0
Total assets	$2,453.0	$1,989.0
Liabilities and Equity
Accounts payable	$455.0	$350.0
Accruals	154.0	140.0
Notes payable	81.0	70.0
Total current liabilities	$690.0	$560.0
Long-term debt	805.0	700.0
Total liabilities	$1,495.0	$1,260.0
Common stock	853.8	662.0
Retained earnings	104.2	67.0
Total common equity	$958.0	$729.0
Total liabilities and equity	$2,453.0	$1,989.0

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

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 $ million 2015 $ million
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 $ million 2015 $ million
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. $ million
What is the ROIC for 2016? 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 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	$ million
Reduction (increase) in debt	$ million
Payment of dividends	$ million
Repurchase (Issue) stock	$ million
Purchase (Sale) of short-term investments	$ million