Free Cash Flows Rhodes Corporation: Income Statements for Year Ending December 3
ID: 2654429 • Letter: F
Question
Free Cash Flows
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.
______ %
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.
2013 2012 Sales $4,025.0 $3,500.0 Operating costs excluding depreciation 3,019.0 2,975.0 Depreciation and amortization 126.0 105.0 Earnings before interest and taxes $880.0 $420.0 Less: Interest 87.0 75.0 Pre-tax income $793.0 $345.0 Taxes (40%) 317.2 138.0 Net income available to common stockholders $475.8 $207.0 Common dividends $428.0 $166.0Explanation / Answer
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.
Solution-
NOPAT = EBIT*(1-T)
NOPAT = $880.0*(1-40%)
NOPAT = $528 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.
Solution-
NOWC = Operating Current assets – Operating Current Liabilities
NOWC (2013) = (Cash +Account Receivable+Inventories) – (Account Paybale + Accruals)
NOWC (2013) = ($51 + $630+ $1,050) – ($385 + $319)
NOWC (2013) = $1,027 million
NOWC (2012) = (Cash +Account Receivable+Inventories) – (Account Paybale + Accruals)
NOWC (2012) = ($46 + $525+ $875) – ($350 + $245)
NOWC (2012) = $851 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.
Solution-
Net Operating Capital (NOC) = NOWC + operating Long term assets
So,
NOC (2013) = $1,027 + $1,260
NOC (2013) = 2,287 million
NOC (2012) = $851 + $1,050
NOC (2012) = 1,901 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.
Solution-
Free cash flow = NOPAT – change in Operating Working Capital – New Investment in fixed assets
Free cash flow = NOPAT – (NOWC 2013 – NOWC 2012) – ($1,260-$1,050)
Free cash flow = $528 – ($1,027- $851) – ($1,260-$1,050)
Free cash flow = $142 Million
What is the ROIC for 2013?
Solution-
ROIC = NOPAT / Total Net Operating capital
ROIC = $528 / $2,287
ROIC = 23.08%
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.
Solution-
Calculation-
After Tax Interest Payment = Interest*(1-T)
After Tax Interest Payment = $87*(1-40%)
After Tax Interest Payment = $52.2 million
Increase in Debt = Increase in Note payable + Increase in LT Debt
Increase in Debt = ($81-$70) + ($805-$700)
Increase in Debt = $116 million
Issue of stock = $1,312.2 - $1087.0
Issue of stock = 225.2 million
Purchase of ST Investment = $21.0 - $18.0
Purchase of ST Investment = $3 million
After-tax interest payment $52.2 million Reduction (increase) in debt $116 million Payment of dividends $428 million Repurchase (Issue) stock 225.2 million Purchase (Sale) of short-term investments $3 millionRelated Questions
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