Problem 3-15 Free Cash Flow Financial information for Powell Panther Corporation is shown below: Powell Panther Corporation: Income Statements for Year Ending December 31 (Millions of Dollars) 2011 2010 Sales $2,310.0 $2,100.0 Operating costs excluding depreciation and amortization 1,790.0 1,785.0 EBITDA $520.0 $315.0 Depreciation and amortization 63.0 48.0 Earnings before interest and taxes $457.0 $267.0 Less: Interest 51.0 46.0 Earnings before taxes $406.0 $221.0 Taxes (40%) 162.4 88.4 Net income $243.6 $132.6 Common dividends $219.0 $106.0 Powell Panther Corporation: Balance Sheets as of December 31 (Millions of Dollars) 2011 2010 Assets Cash and equivalents $26.0 $21.0 Accounts receivable 263.0 210.0 Inventories 411.0 357.0 Total current assets $700.0 $588.0 Net plant and equipment 628.0 483.0 Total assets $1,328.0 $1,071.0 Liabilities and Equity Accounts payable $169.0 $147.0 Notes payable 46.0 42.0 Accruals 193.0 168.0 Total current liabilities $408.0 $357.0 Long-term bonds 462.0 420.0 Total debt $870.0 $777.0 Common stock 393.4 254.0 Retained earnings 64.6 40.0 Common equity $458.0 $294.0 Total liabilities and equity $1,328.0 $1,071.0 Write out your answer completely. For example, 13 million should be entered as 13,000,000. What was net operating working capital for 2010 and 2011? 2010: $ 2011: $ What was the 2011 free cash flow? $ How would you explain the large increase in 2011 dividends? The large increase in net income from 2010 to 2011 explains the large increase in 2011 dividends. The large increase in free cash flow from 2010 to 2011 explains the large increase in 2011 dividends. The large increase in EBIT from 2010 to 2011 explains the large increase in 2011 dividends. The large increase in sales from 2010 to 2011 explains the large increase in 2011 dividends. The large increase in retained earnings from 2010 to 2011 explains the large increase in 2011 dividends.