In: Finance
4.) eBook
Financial information for Powell Panther Corporation is shown below: Powell Panther Corporation: Income Statements for Year Ending December 31 (Millions of Dollars)
Powell Panther Corporation: Balance Sheets as of December 31 (Millions of Dollars)
Write out your answers completely. For example, 25 million should be entered as 25,000,000. Round your answers to the nearest dollar, if necessary. Negative values, if any, should be indicated by a minus sign.
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A)To calculate the net operating working capital: there are two formulas which can be used:
To calculate the Net operating working capital for
1. 2018= Current operating assets-Current operating liabilities
=960000000-336000000=$624000000
2. 2019= Current operating assets-Current operating liabilities
NOWC=1195000000-403800000=$791200000
B)To calculate free cash flow for 2019:
EBIT*(1-Taxrate)+Non cash expenses-change in(Current assets-current liabilities)-Capital expenditure(difference of plant and machinery from current year to previous year)
=465000000(1-0.25)+81-(1195000000-403800000)-(805000000-644000000)
=-603449919
C) IV. large increase in sales from 2018 to 2019 will explain the large increase in the dividends in 2019. As there was an increase of 30% increase in sales Year on year, the entire capital structure.