Answered step by step
Verified Expert Solution
Link Copied!

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 $7,150.0 $6,500.0 Operating costs excluding

Problem 2-12 Free Cash Flows

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

2016 2015
Sales $7,150.0 $6,500.0
Operating costs excluding depreciation 5,363.0 5,525.0
Depreciation and amortization 187.0 156.0
Earnings before interest and taxes $1,600.0 $819.0
Less: Interest 154.0 140.0
Pre-tax income $1,446.0 $679.0
Taxes (40%) 578.4 271.6
Net income available to common stockholders $867.6 $407.4
Common dividends $781.0 $326.0

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

2016 2015
Assets
Cash $118.0 $98.0
Short-term investments 36.0 33.0
Accounts receivable 822.0 715.0
Inventories 1,144.0 1,040.0
Total current assets $2,120.0 $1,886.0
Net plant and equipment 1,872.0 1,560.0
Total assets $3,992.0 $3,446.0
Liabilities and Equity
Accounts payable $598.0 $520.0
Accruals 423.0 325.0
Notes payable 143.0 130.0
Total current liabilities $1,164.0 $975.0
Long-term bonds 1,430.0 1,300.0
Total liabilities $2,594.0 $2,275.0
Common stock 1,189.4 1,049.0
Retained earnings 208.6 122.0
Total common equity $1,398.0 $1,171.0
Total liabilities and equity $3,992.0 $3,446.0

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

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

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Price Of Football Understanding Football Club Finance

Authors: Kieran Maguire

3rd Edition

1788216830, 978-1788216838

More Books

Students also viewed these Accounting questions

Question

What is the relationship between public goods and free riders?

Answered: 1 week ago

Question

Understand the different approaches to job design. page 184

Answered: 1 week ago