Problem 6 12 Free Cash Flows Rhodes Corporation Income Statements for Year Ending December 31 (Millions of Dollars) 2015 2014 Sales $4,375 0 $3,500 0 Operating costs excluding depreciation 3,719 0 2,975 0 Depreciation and amortization 105 0 84 0 Earnings before interest and taxes $551 0 $441 0 Less Interest 94 0 75 0 Pre tax income $457 0 $366 0 Taxes (40 ) 182 8 146 4 Net income available to common stockholders $274 2 $219 6 Common dividends $247 0 $176 0 Rhodes Corporation Balance Sheets as of December 31 (Millions of Dollars) 2015 2014 Assets Cash $49 0 $39 0 Short term investments 23 0 18 0 Accounts receivable 604 0 525 0 Inventories 774 0 595 0 Total current assets $1,450 0 $1,177 0 Net plant and equipment 1,050 0 840 0 Total assets $2,500 0 $2,017 0 Liabilities and Equity Accounts payable $306 0 $245 0 Accruals 263 0 210 0 Notes payable 88 0 70 0 Total current liabilities $657 0 $525 0 Long term bonds 875 0 700 0 Total liabilities $1,532 0 $1,225 0 Common stock 875 8 727 0 Retained earnings 92 2 65 0 Total common equity $968 0 $792 0 Total liabilities and equity $2,500 0 $2,017 0 Using Rhodes Corporation's financial statements (shown above), answer the following questions What is the net operating profit after taxes (NOPAT) for 2015 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 2015 $ million 2014 $ 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 2015 $ million 2014 $ million What is the free cash flow for 2015 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 2015 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

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Jul 30, 2024

Problem 6-12 Free Cash Flows Rhodes Corporation: Income Statements for Year Ending December 31 (Millions of Dollars) 2015 2014 Sales $4,375.0 $3,500.0 Operating costs excluding

Problem 6-12 Free Cash Flows

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

	2015	2014
Sales	$4,375.0	$3,500.0
Operating costs excluding depreciation	3,719.0	2,975.0
Depreciation and amortization	105.0	84.0
Earnings before interest and taxes	$551.0	$441.0
Less: Interest	94.0	75.0
Pre-tax income	$457.0	$366.0
Taxes (40%)	182.8	146.4
Net income available to common stockholders	$274.2	$219.6
Common dividends	$247.0	$176.0

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

	2015	2014
Assets
Cash	$49.0	$39.0
Short-term investments	23.0	18.0
Accounts receivable	604.0	525.0
Inventories	774.0	595.0
Total current assets	$1,450.0	$1,177.0
Net plant and equipment	1,050.0	840.0
Total assets	$2,500.0	$2,017.0
Liabilities and Equity
Accounts payable	$306.0	$245.0
Accruals	263.0	210.0
Notes payable	88.0	70.0
Total current liabilities	$657.0	$525.0
Long-term bonds	875.0	700.0
Total liabilities	$1,532.0	$1,225.0
Common stock	875.8	727.0
Retained earnings	92.2	65.0
Total common equity	$968.0	$792.0
Total liabilities and equity	$2,500.0	$2,017.0

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

What is the net operating profit after taxes (NOPAT) for 2015? 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. 2015 $______ million 2014 $ _______ 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. 2015 $ ______ million 2014 $ ________ million
What is the free cash flow for 2015? 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 2015? 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