Rhodes Corporation: Income Statements for Year Ending December 31 (Millions of D
ID: 2728837 • Letter: R
Question
Rhodes Corporation: Income Statements for Year Ending December 31 (Millions of Dollars)
Rhodes Corporation: Balance Sheets as of December 31 (Millions of Dollars)
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.
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.
2015
2016
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.
2015
2016
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.
What is the ROIC for 2016? 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.
2016 2015 Sales $2,400.0 $2,000.0 Operating costs excluding depreciation 1,980.0 1,700.0 Depreciation and amortization 62.0 52.0 Earnings before interest and taxes $358.0 $248.0 Less: Interest 52.0 43.0 Pre-tax income $306.0 $205.0 Taxes (40%) 122.4 82.0 Net income available to common stockholders $183.6 $123.0 Common dividends $165.0 $98.0Explanation / Answer
1) Net operating profit after tax for year 2016 = Earnings before interest & taxes * (1 - Tax rate)
= 358 * (1 - 0.40)
= $ 214.80 million [214.80 * 1000000 = $214800000]
Conclusion:- Net operating profit after tax for year 2016 = $214800000. [214.80 * 1000000]
2) Amount of net working capital = Total Current assets - Total Current liabilities
Year 2016 = 915 - 430 = $ 485 Million [ 485 * 1000000 = $ 485000000]
Year 2015 = 716 - 360 = $ 356 Million [ 356 * 1000000 = $ 356000000]
3) Total net operating capital for both years = Net working capital + total non-current operating assets
Year 2016 = 485 + 624 = $ 1109 Million [ 1109 * 1000000 = 1109000000]
Year 2015 = 356 + 520 = $ 876 Million [ 876 * 1000000 = 876000000]
5) Return on invested capital (ROIC):- = (Net income - dividend) / Capital emloyed * 100
Year 2016
Capital employed = Debt + equity
Debt = Long term bond = 480 Million
Equity = Common stock + Retained earnings = 572.4 + 56.6 = $ 629 Million
Thus, capital employed = 629 + 480 = 1109 Million
Return on invested capital (ROIC):- = (183.6 - 165) / 1109 * 100
= 18.6 / 1109 * 100
= 1.68 % (approx)
Year 2015
Capital employed = Debt + equity
Debt = Long term bond = 400 Million
Equity = Common stock + Retained earnings = 438 + 38 = $ 476 Million
Thus, capital employed = 400 + 476 = 876 Million
Return on invested capital (ROIC):- = (123 - 98) / 876 * 100
= 25 / 876 * 100
= 2.85 % (approx)
4) Free cash flow for year 2016 = Net income available to common stock holders + Depreciation & amortization.
= 183.60 + 62
= $ 245.60 Million [ 245.60 * 1000000 = $ 245600000]
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