Rhodes Corporation: Income Statements for Year Ending December 31 (Millions of Dollars) 2020 2019 Sales $11,000 $10,000 Operating costs excluding depreciation Depreciation and amortization Earnings before interest and taxes 9,612 8,728 380 360 $ 1,008 912 Less interest 120 100 Pre-tax income $ 888 $ 812 Taxes (25%) 222 203 Net income available to common stockholders $ 609 $ 666 $ 202 Common dividends $4 200 Rhodes Corporation: Balance Sheets as of December 31 (Millions of Dollars) 2020 2019 Assets Cash $ 550 $ 500 Short-term investments 110 100 Accounts receivable 2,750 2,500 Inventories 1,650 1,500 Total current assets $5,060 $4,600 Net plant and equipment Total assets 3,850 3,500 $8,910 $8,100 Liabilities and Equity Accounts payable Accruals $1,100 $1,000 550 500 Notes payable Total current liabilities 384 200 $2,034 $1,700 Long-term debt Total liabilities 1,100 1,000 $2,700 $3,134 4,312 Common stock 4,400 Retained earnings Total common equity Total liabilities and equity 1,464 $5,776 $8,910 1,000 $5,400 $8,100
Rhodes Corporation: Income Statements for Year Ending December 31 (Millions of Dollars) 2020 2019 Sales $11,000 $10,000 Operating costs excluding depreciation Depreciation and amortization Earnings before interest and taxes 9,612 8,728 380 360 $ 1,008 912 Less interest 120 100 Pre-tax income $ 888 $ 812 Taxes (25%) 222 203 Net income available to common stockholders $ 609 $ 666 $ 202 Common dividends $4 200 Rhodes Corporation: Balance Sheets as of December 31 (Millions of Dollars) 2020 2019 Assets Cash $ 550 $ 500 Short-term investments 110 100 Accounts receivable 2,750 2,500 Inventories 1,650 1,500 Total current assets $5,060 $4,600 Net plant and equipment Total assets 3,850 3,500 $8,910 $8,100 Liabilities and Equity Accounts payable Accruals $1,100 $1,000 550 500 Notes payable Total current liabilities 384 200 $2,034 $1,700 Long-term debt Total liabilities 1,100 1,000 $2,700 $3,134 4,312 Common stock 4,400 Retained earnings Total common equity Total liabilities and equity 1,464 $5,776 $8,910 1,000 $5,400 $8,100
Chapter11: The Corporate Income Tax
Section: Chapter Questions
Problem 5P: Fisafolia Corporation has gross income from operations of $210,000 and operating expenses of...
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Rhodes Corporation’s financial statements are shown after part f. Suppose the federalplus- state tax corporate tax is 25%. Answer the following questions.
a. What is the
b. What are the amounts of net operating
c. What are the amounts of total net operating capital for both years?
d. What is the
e. What is the ROIC for 2020?
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.)
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