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Free Cash Flows Rhodes Corporation: Income Statements for Year Ending December 31 (Millions of Dollars) 2016 2015 Sales $7,800.0 $6,500.0 Operating costs excluding depreciation 6,240.0 5,525.0...

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Free Cash Flows
Rhodes Corporation: Income Statements for Year Ending December 31 (Millions of Dollars)
2016 2015
Sales $7,800.0 $6,500.0
Operating costs excluding depreciation 6,240.0 5,525.0
Depreciation and amortization 143.0 130.0
Earnings before interest and taxes $1,417.0 $845.0
Less Interest 168.0 140.0
Pre-tax income $1,249.0 $705.0
Taxes (40%) 499.6 282.0
Net income available to common stockholders $749.4 $423.0
Common dividends $674.0 $338.0
Rhodes Corporation: Balance Sheets as of December 31 (Millions of Dollars)
2016 2015
Assets
Cash $79.0 $72.0
Short-term investments 40.0 33.0
Accounts receivable 930.0 715.0
Inventories 1,121.0 975.0
Total current assets $2,170.0 $1,795.0
Net plant and equipment 1,430.0 1,300.0
Total assets $3,600.0 $3,095.0
Liabilities and Equity
Accounts payable $546.0 $455.0
Accruals 299.0 260.0
Notes payable 156.0 130.0
Total current liabilities $1,001.0 $845.0
Long-term debt 1,560.0 1,300.0
Total liabilities $2,561.0 $2,145.0
Common stock 835.6 822.0
Retained earnings 203.4 128.0
Total common equity $1,039.0 $950.0
Total liabilities and equity $3,600.0 $3,095.0

Using Rhodes Corporation's financial statements (shown above), answer the following questions.
  1. What is the net operating profit after taxes (NOPAT) for 2016? Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answer to one decimal place.
    $ million
  2. What are the amounts of net operating working capital for both years? Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answers to one decimal place.
    2016 $ million
    2015 $ million
  3. What are the amounts of total net operating capital for both years? Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answers to one decimal place.
    2016 $ million
    2015 $ million
  4. What is the free cash flow for 2016? Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answer to one decimal place.
    $ million
  5. What is the ROIC for 2016? Round your answer to two decimal places.
    %
  6. 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 answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answers to one decimal place.
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
005_6nmeajo-pbu2deep.docx
Answered Same Day Dec 25, 2021

Solution

David answered on Dec 25 2021
125 Votes
Question 4
Free cash flow = NOPAT – change in Operating Working Capital – New Investment in fixed
assets
Free cash flow = 850.2 – (1285-1047) –(1430-1300) = $ 482.2 million
Question 5
ROIC = NOPAT / Total Net Operating capital
ROIC = 850.2/2715 = 31.31%
Question 6
Increase in debt =...
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