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 $ 13,000 $ 11,000 Operating costs excluding depreciation 11,522 9,638 Depreciation and amortization 390 370 Earnings before interest and taxes $ 1,088 $ 992 Less interest 240 200 Pre-tax income $ 848 $ 792 Taxes (25%) 212 198 Net income available to common stockholders $ 636 $ 594 Common dividends $ 205 $ 200 Rhodes Corporation: Balance Sheets as of December 31 (Millions of Dollars) 2020 2019 Assets Cash $ 550 $ 500 Short-term investments 120 100 Accounts receivable 2,750 2,500 Inventories 1,750 1,700 Total current assets $ 5,170 $ 4,800 Net plant and equipment 3,650 3,500 Total assets $ 8,820 $ 8,300 Liabilities and Equity Accounts payable $ 1,100 $ 1,000 Accruals 550 500 Notes payable 182 100 Total current liabilities $ 1,832 $ 1,600 Long-term debt 1,100 1,000 Total liabilities $ 2,932 2,600 Common stock 4,257 4,500 Retained earnings 1,631 1,200 Total common equity $ 5,888 $ 5,700 Total liabilities and equity $ 8,820 $ 8,300 Suppose the federal-plus-state tax corporate tax is 25%. Answer the following questions. 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 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 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 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 What is the ROIC for 2020? 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 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

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 $ 13,000 $ 11,000 Operating costs excluding depreciation 11,522 9,638 Depreciation and amortization 390 370 Earnings before interest and taxes $ 1,088 $ 992 Less interest 240 200 Pre-tax income $ 848 $ 792 Taxes (25%) 212 198 Net income available to common stockholders $ 636 $ 594 Common dividends $ 205 $ 200 Rhodes Corporation: Balance Sheets as of December 31 (Millions of Dollars) 2020 2019 Assets Cash $ 550 $ 500 Short-term investments 120 100 Accounts receivable 2,750 2,500 Inventories 1,750 1,700 Total current assets $ 5,170 $ 4,800 Net plant and equipment 3,650 3,500 Total assets $ 8,820 $ 8,300 Liabilities and Equity Accounts payable $ 1,100 $ 1,000 Accruals 550 500 Notes payable 182 100 Total current liabilities $ 1,832 $ 1,600 Long-term debt 1,100 1,000 Total liabilities $ 2,932 2,600 Common stock 4,257 4,500 Retained earnings 1,631 1,200 Total common equity $ 5,888 $ 5,700 Total liabilities and equity $ 8,820 $ 8,300 Suppose the federal-plus-state tax corporate tax is 25%. Answer the following questions. 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 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 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 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 What is the ROIC for 2020? 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 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

Fundamentals Of Financial Management, Concise Edition (mindtap Course List)

10th Edition

ISBN:9781337902571

Author:Eugene F. Brigham, Joel F. Houston

Publisher:Eugene F. Brigham, Joel F. Houston

Chapter3: Financial Statements, Cash Flow, And Taxes

Section: Chapter Questions

Problem 19SP

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