Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Problem 2-12 Free Cash Flows Rhodes Corporation: Income Statements for Year Ending December 31 (Millions of Dollars) 2016 2015 Sales $6,600.0 $6,000.0 Operating costs excluding
Problem 2-12 Free Cash Flows
Rhodes Corporation: Income Statements for Year Ending December 31 (Millions of Dollars)
2016 | 2015 | ||
Sales | $6,600.0 | $6,000.0 | |
Operating costs excluding depreciation | 5,610.0 | 5,100.0 | |
Depreciation and amortization | 165.0 | 132.0 | |
Earnings before interest and taxes | $825.0 | $768.0 | |
Less Interest | 142.0 | 129.0 | |
Pre-tax income | $683.0 | $639.0 | |
Taxes (40%) | 273.2 | 255.6 | |
Net income available to common stockholders | $409.8 | $383.4 | |
Common dividends | $369.0 | $307.0 |
Rhodes Corporation: Balance Sheets as of December 31 (Millions of Dollars)
2016 | 2015 | ||
Assets | |||
Cash | $83.0 | $72.0 | |
Short-term investments | 33.0 | 30.0 | |
Accounts receivable | 936.0 | 780.0 | |
Inventories | 1,725.0 | 1,500.0 | |
Total current assets | $2,777.0 | $2,382.0 | |
Net plant and equipment | 1,650.0 | 1,320.0 | |
Total assets | $4,427.0 | $3,702.0 | |
Liabilities and Equity | |||
Accounts payable | $702.0 | $540.0 | |
Accruals | 462.0 | 420.0 | |
Notes payable | 132.0 | 120.0 | |
Total current liabilities | $1,296.0 | $1,080.0 | |
Long-term debt | 1,320.0 | 1,200.0 | |
Total liabilities | $2,616.0 | $2,280.0 | |
Common stock | 1,655.2 | 1,307.0 | |
Retained earnings | 155.8 | 115.0 | |
Total common equity | $1,811.0 | $1,422.0 | |
Total liabilities and equity | $4,427.0 | $3,702.0 |
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 $1.2 million should be entered as 1.2, not 1,200,000. Round your answer to one decimal place. $ million
- hat 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 $1.2 million should be entered as 1.2, not 1,200,000. Round your answer to one decimal place.
- What is the ROIC for 2016? Round your answer to two decimal places.
- %$ million
- 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
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started