Problem 2-18 (Free Cash Flows) $ 932 $ eBook Free Cash Flows Rhodes Corporation's financial statements are shown below. Rhodes Corporation: Income Statements for Year Ending December 31 (Millions of Dollars) 2020 2019 Sales $11,000 $ 10,000 Operating costs excluding depreciation 9,498 8,678 Depreciation and amortization 430 390 Earnings before interest and taxes $ 1,072 Less interest 280 200 Pre-tax income $ 792 732 Taxes (25%) 198 183 Net income available to common stockholders $ 594 $ 549 Common dividends 204 $ 200 Rhodes Corporation: Balance Sheets as of December 31 (Millions of dollars) 2020 2019 Assets Cash $ 650 $ 600 Short-term investments 200 Accounts receivable 2,750 2,500 Inventories 1,450 1,300 Total current assets $5,070 $ 4,600 Net plant and equipment 3,650 3,500 Total assets $8,720 $ 8,100 $ 220 Liabilities and Equity Accounts payable $ 1,300 $ 1,200 Accruals 650 600 Notes payable 344 200 Total current liabilities $2,294 $ 2,000 Long-term debt 1,300 1,200 Total liabilities $ 3,594 3,200 Common stock 3,736 3,900 Retained earnings 1,390 1,000 Total common equity $ 5,126 $ 4,900 Total liabilities and equity $8,720 $ 8,100 Suppose the federal-plus-state tax corporate tax is 25%. Answer the following questions. a. What is the net operating profit after taxes (NOPAT) for 2020? Enter your answer in millions. For example, an answer of $1 million should be entered as 1, not 1,000,000. Round your answer to the nearest whole number. $ million b. What are the amounts of net operating working capital for both years? Enter your answers in millions. For example, an answer of $1 million should be entered as 1, not 1,000,000. Round your answers to the nearest whole number. 2020: $ million 2019: $ million c. What are the amounts of total net operating capital for both years? Enter your answers in millions. For example, an answer of $1 million should be entered as 1, not 1,000,000. Round your answers to the nearest whole number. 2020: $ million 2019: $ million d. What is the free cash flow for 2020? Enter your answer in millions. For example, an answer of $1 million should be entered as 1, not 1,000,000. Cash outflow, if any, should be indicated by a minus sign. Round your answer to the nearest whole number. $ million e. What is the ROIC for 2020? Round your answer to two decimal places. % 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 answers in millions. For example, an answer of $1 million should be entered as 1, not 1,000,000. Round your answers to the nearest whole number. 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
