In: Finance
Rhodes Corporation: Income Statements for Year Ending
December 31
(Millions of Dollars)
2020 | 2019 | ||||
Sales | $ | 12,000 | $ | 11,000 | |
Operating costs excluding depreciation | 10,520 | 9,674 | |||
Depreciation and amortization | 380 | 350 | |||
Earnings before interest and taxes | $ | 1,100 | $ | 976 | |
Less interest | 240 | 200 | |||
Pre-tax income | $ | 860 | $ | 776 | |
Taxes (25%) | 215 | 194 | |||
Net income available to common stockholders | $ | 645 | $ | 582 | |
Common dividends | $ | 205 | $ | 200 |
Rhodes Corporation: Balance Sheets as of December 31 (Millions of Dollars)
2020 | 2019 | ||||
Assets | |||||
Cash | $ | 450 | $ | 400 | |
Short-term investments | 110 | 100 | |||
Accounts receivable | 2,750 | 2,500 | |||
Inventories | 1,350 | 1,200 | |||
Total current assets | $ | 4,660 | $ | 4,200 | |
Net plant and equipment | 3,750 | 3,500 | |||
Total assets | $ | 8,410 | $ | 7,700 | |
Liabilities and Equity | |||||
Accounts payable | $ | 900 | $ | 800 | |
Accruals | 450 | 400 | |||
Notes payable | 356 | 200 | |||
Total current liabilities | $ | 1,706 | $ | 1,400 | |
Long-term debt | 900 | 800 | |||
Total liabilities | $ | 2,606 | 2,200 | ||
Common stock | 4,164 | 4,300 | |||
Retained earnings | 1,640 | 1,200 | |||
Total common equity | $ | 5,804 | $ | 5,500 | |
Total liabilities and equity | $ | 8,410 | $ | 7,700 |
Suppose the federal-plus-state tax corporate tax is 25%. Answer the following questions.
net operating profit after taxes (NOPAT) for 2020 is 825million
amounts of net operating working capital for both years: 3200million (2020), 2900million (2019)
amounts of total net operating capital for both years: 6950million (2020), 6400million (2019)
a, 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
b, What is the ROIC for 2020? Round your answer to two decimal places.
___ %
c, 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 |