Financial information for Powell Panther Corporation is shown below: Powell Pant
ID: 2620272 • Letter: F
Question
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.
What was net operating working capital for 2015 and 2016?
2015: $
2016: $
What was the 2016 free cash flow?
$
How would you explain the large increase in 2016 dividends?
The large increase in free cash flow from 2015 to 2016 explains the large increase in 2016 dividends.
The large increase in net income from 2015 to 2016 explains the large increase in 2016 dividends.
The large increase in EBIT from 2015 to 2016 explains the large increase in 2016 dividends.
The large increase in sales from 2015 to 2016 explains the large increase in 2016 dividends.
The large increase in retained earnings from 2015 to 2016 explains the large increase in 2016 dividends.
2016 2015 Sales $2,875.0 $2,300.0 Operating costs excluding depreciation and amortization 2,156.0 1,955.0 EBITDA $719.0 $345.0 Depreciation and amortization 74.0 64.0 Earnings before interest and taxes (EBIT) $645.0 $281.0 Interest 63.0 51.0 Earnings before taxes (EBT) $582.0 $230.0 Taxes (40%) 232.8 92.0 Net income $349.2 $138.0 Common dividends $314.0 $110.0Explanation / Answer
2015
2016
operating current assets
782
982
operating current liabilities
276
344
net operating working capital
506
638
Free cash flow 2016
net income
349.2
add depreciation and amortization
74
increase in accounts receivables
-64
increase in inventory
-200
increase in accounts payable
35
increase in accruals
35
increase in notes payable
12
cash flow from operating activities
241.2
free cash flow
operating cash flow-capital expenditure
241.2-171
70.2
CAPITAL EXPENDITURE = (year end plant balance+ depreciation)-previous year balance
(741+74)-644
171
The large increase in net income from 2015 to 2016 explains the large increase in 2016 dividends.
2015
2016
operating current assets
782
982
operating current liabilities
276
344
net operating working capital
506
638
Free cash flow 2016
net income
349.2
add depreciation and amortization
74
increase in accounts receivables
-64
increase in inventory
-200
increase in accounts payable
35
increase in accruals
35
increase in notes payable
12
cash flow from operating activities
241.2
free cash flow
operating cash flow-capital expenditure
241.2-171
70.2
CAPITAL EXPENDITURE = (year end plant balance+ depreciation)-previous year balance
(741+74)-644
171
The large increase in net income from 2015 to 2016 explains the large increase in 2016 dividends.
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