Financial information for Powell Panther Corporation is shown below: Powell Pant

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 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 free cash flow 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.

-Select-IIIIIIIVVItem 4

2016 2015 Sales $3,450.0 $3,000.0 Operating costs excluding depreciation and amortization 2,674.0 2,550.0 EBITDA $776.0 $450.0 Depreciation and amortization 96.0 87.0 Earnings before interest and taxes (EBIT) $680.0 $363.0   Interest 76.0 66.0 Earnings before taxes (EBT) $604.0 $297.0   Taxes (40%) 241.6 118.8 Net income $362.4 $178.2 Common dividends $326.0 $143.0

Explanation / Answer

Net Operating working capital

NOWC = Accounts receivable + Inventories - Accounts payables - Accruals

Notes payables have not been included as it is debt like in nature.

1) 2015 = 300 + 480 - 210 - 180 = 390 = $390,000,000

2) 2016 = 375 + 624 - 242 - 207 = 550 = $550,000,000

2016 Free cash flow = 2016 EBITDA + Change in NWC - Capex

Capex = Change in Fixed assets

2016 Free cash flow = 776 + (390-550) - (957-870)

2016 Free cash flow = $529,000,000

The answer to last question would be:

The large increase in net income from 2015 to 2016 explains the large increase in 2016 dividends

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