Reference no: EM132489043
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 $12,000 $10,000
Operating costs excluding depreciation 10,642 8,734
Depreciation and amortization 390 350
Earnings before interest and taxes $ 968 $ 916
Less interest 240 200
Pre-tax income $728 $716
Taxes (25%) 182 179
Net income available to common stockholders $546 $537
Common dividends $204 $200
Rhodes Corporation: Balance Sheets as of December 31 (Millions of Dollars)
2020 2019
Assets
Cash $550 $500
Short-term investments 220 200
Accounts receivable 2,750 2,500
Inventories 1,850 1,700
Total current assets $ 5,370 $ 4,900
Net plant and equipment 3,650 3,500
Total assets $9,020 $ 8,400
Liabilities and Equity
Accounts payable $1,100 $1,000
Accruals 550 500
Notes payable 384 200
Total current liabilities $2,034 $1,700
Long-term debt 1,100 1,000
Total liabilities $3,134 2,700
Common stock 4,344 4,500
Retained earnings 1,542 1,200
Total common equity $5,886 $5,700
Total liabilities and equity $9,020 $ 8,400
Suppose the federal-plus-state tax corporate tax is 25%. Answer the following questions.
Question 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.
Question 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.
Question 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.
Question 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.
Question e. What is the ROIC for 2020? Round your answer to two decimal places.
Question 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.