Rhodes Corporation: Income Statements for Year Ending December 31 (Millions of D

Question

Rhodes Corporation: Income Statements for Year Ending December 31 (Millions of Dollars)

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

Using Rhodes Corporation's financial statements (shown above), answer the following questions.

What is the net operating profit after taxes (NOPAT) for 2013? 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

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.
2013 $   million
2012 $   million

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.
2013 $   million
2012 $   million

What is the free cash flow for 2013? 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

What is the ROIC for 2013? Round your answer to two decimal places.
%

2013 2012 Sales $6,600.0 $5,500.0 Operating costs excluding depreciation 4,950.0 4,675.0 Depreciation and amortization 139.0 127.0 Earnings before interest and taxes $1,511.0 $698.0   Less: Interest 142.0 118.0 Pre-tax income $1,369.0 $580.0   Taxes (40%) 547.6 232.0 Net income available to common stockholders $821.4 $348.0 Common dividends $739.0 $278.0

Explanation / Answer

1) NOPAT = OPERATING PROFIT * (1 - TAX RATE)

NOPAT (2013) = 1511 * (1 - 0.40)

= 906.60

*as operating profit in this case is same as profit before interest and taxes.

2)Net Operating Working Capital = Current asset - current liabilities

Particulars 2013 2012

Current asset

Cash 86.00 66.00

Receivables 666.00 605.00

Inventories 1089.00 990.00

sub total (1) 1841.00 1661

Current Liabilities

accounts payable 715.00 550.00

accruals 344.00 275.00

   sub total (2) 1059.00 825.00

Net operating WC ( 1 ) - ( 2 ) 782.00 836.00

3) Net operating capital = Net operating working capital + non current operating assets

NOC (2013) = 782 + 1392 ( net plant and equipment) = 2174.00

NOC (2013) = 836 + 1265 ( net plant and equipment) = 2101.00

4) Free Cash Flow = NOPAT - changes in net operating capital

FCF (2013) = 906.6 + (2174 -2101) = 836.60

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