Rhodes Corporation: Income Statements for Year Ending December 31 (Millions of D
ID: 2728819 • 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.
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
Solution.
1. Net operating profit after taxes (NOPAT) for 2016.
Pre-tax income = $306.00
Income tax 40% = $122.40
After tax net income = $183.60
2. Calculation of net working capital.
Formula = Current asset - Current libilities.
For 2015 = $716.0 - $360.0 = $356
For 2016 = $915.0 - $430.0 = $485
3. The amounts of total net operating capital for both years.
Total Net Operating Capital = Net Operating Working Capital + Non-current Operating Assets
For 2015 = $716.0 + $520 = $1,236
For 2016 = $915.0 + $624 = $1,539.
4. The amount of free cash flow for 2016.
Free cash flow = Net operating profit after taxes - Change in total net operating capital over the period.
= $183.60 - (1,539 - 1,236 ) = -$119.40
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