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 $ 11,000 Operating costs excluding depreciation 10,522 9,674 Depreciation and amortization 410 370 Earnings before interest and taxes $ 1,068 $ 956 Less interest 180 100 Pre-tax income $ 888 $ 856 Taxes (25%) 222 214 Net income available to common stockholders $ 666 $ 642 Common dividends $ 203 $ 200 Rhodes Corporation: Balance Sheets as of December 31 (Millions of Dollars) 2020 2019 Assets Cash $ 650 $ 600 Short-term investments 210 200 Accounts receivable 2,750 2,500 Inventories 1,950 1,800 Total current assets $ 5,560 $ 5,100 Net plant and equipment 3,850 3,500 Total assets $ 9,410 $ 8,600 Liabilities and Equity Accounts payable $ 1,300 $ 1,200 Accruals 650 600 Notes payable 194 100 Total current liabilities $ 2,144 $ 1,900 Long-term debt 1,300 1,200 Total liabilities $ 3,444 3,100 Common stock 4,703 4,700 Retained earnings 1,263 800 Total common equity $ 5,966 $ 5,500 Total liabilities and equity $ 9,410 $ 8,600 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

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 $ 11,000 Operating costs excluding depreciation 10,522 9,674 Depreciation and amortization 410 370 Earnings before interest and taxes $ 1,068 $ 956 Less interest 180 100 Pre-tax income $ 888 $ 856 Taxes (25%) 222 214 Net income available to common stockholders $ 666 $ 642 Common dividends $ 203 $ 200 Rhodes Corporation: Balance Sheets as of December 31 (Millions of Dollars) 2020 2019 Assets Cash $ 650 $ 600 Short-term investments 210 200 Accounts receivable 2,750 2,500 Inventories 1,950 1,800 Total current assets $ 5,560 $ 5,100 Net plant and equipment 3,850 3,500 Total assets $ 9,410 $ 8,600 Liabilities and Equity Accounts payable $ 1,300 $ 1,200 Accruals 650 600 Notes payable 194 100 Total current liabilities $ 2,144 $ 1,900 Long-term debt 1,300 1,200 Total liabilities $ 3,444 3,100 Common stock 4,703 4,700 Retained earnings 1,263 800 Total common equity $ 5,966 $ 5,500 Total liabilities and equity $ 9,410 $ 8,600 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

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

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		$	11,000
Operating costs excluding depreciation		10,522			9,674
Depreciation and amortization		410			370
Earnings before interest and taxes	$	1,068		$	956
Less interest		180			100
Pre-tax income	$	888		$	856
Taxes (25%)		222			214
Net income available to common stockholders	$	666		$	642
Common dividends	$	203		$	200

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

	2020		2019
Assets
Cash	$	650		$	600
Short-term investments		210			200
Accounts receivable		2,750			2,500
Inventories		1,950			1,800
Total current assets	$	5,560		$	5,100
Net plant and equipment		3,850			3,500
Total assets	$	9,410		$	8,600

Liabilities and Equity
Accounts payable	$	1,300		$	1,200
Accruals		650			600
Notes payable		194			100
Total current liabilities	$	2,144		$	1,900
Long-term debt		1,300			1,200
Total liabilities	$	3,444			3,100
Common stock		4,703			4,700
Retained earnings		1,263			800
Total common equity	$	5,966		$	5,500
Total liabilities and equity	$	9,410		$	8,600

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

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