Financial information for Powell Panther Corporation is shown below: Powell Panther Corporation: Income Statements for Year Ending December 31 (Millions of Dollars) 2018 2017 Sales $ 1,800.0 $ 1,500.0 Operating costs excluding depreciation and amortization 1,395.0 1,275.0 EBITDA $ 405.0 $ 225.0 Depreciation and amortization 43.0 39.0 Earnings before interest and taxes (EBIT) $ 362.0 $ 186.0 Interest 40.0 33.0 Earnings before taxes (EBT) $ 322.0 $ 153.0 Taxes (40%) 128.8 61.2 Net income $ 193.2 $ 91.8 Common dividends $ 174.0 $ 73.0 Powell Panther Corporation: Balance Sheets as of December 31 (Millions of Dollars) 2018 2017 Assets Cash and equivalents $ 23.0 $ 18.0 Accounts receivable 248.0 225.0 Inventories 396.0 360.0 Total current assets $ 667.0 $ 603.0 Net plant and equipment 429.0 390.0 Total assets $ 1,096.0 $ 993.0 Liabilities and Equity Accounts payable $ 104.0 $ 90.0 Accruals 144.0 120.0 Notes payable 36.0 30.0 Total current liabilities $ 284.0 $ 240.0 Long-term bonds 360.0 300.0 Total liabilities $ 644.0 $ 540.0 Common stock 404.8 425.0 Retained earnings 47.2 28.0 Common equity $ 452.0 $ 453.0 Total liabilities and equity $ 1,096.0 $ 993.0 Write out your answers completely. For example, 25 million should be entered as 25,000,000. Round your answers to the nearest dollar, if necessary. Negative values, if any, should be indicated by a minus sign. What was net operating working capital for 2017 and 2018? Assume the firm has no excess cash. 2017: $ 2018: $ What was the 2018 free cash flow? $ How would you explain the large increase in 2018 dividends? The large increase in net income from 2017 to 2018 explains the large increase in 2018 dividends. The large increase in EBIT from 2017 to 2018 explains the large increase in 2018 dividends. The large increase in sales from 2017 to 2018 explains the large increase in 2018 dividends. The large increase in retained earnings from 2017 to 2018 explains the large increase in 2018 dividends. The large increase in free cash flow from 2017 to 2018 explains the large increase in 2018 dividends.

Financial information for Powell Panther Corporation is shown below: Powell Panther Corporation: Income Statements for Year Ending December 31 (Millions of Dollars) 2018 2017 Sales $ 1,800.0 $ 1,500.0 Operating costs excluding depreciation and amortization 1,395.0 1,275.0 EBITDA $ 405.0 $ 225.0 Depreciation and amortization 43.0 39.0 Earnings before interest and taxes (EBIT) $ 362.0 $ 186.0 Interest 40.0 33.0 Earnings before taxes (EBT) $ 322.0 $ 153.0 Taxes (40%) 128.8 61.2 Net income $ 193.2 $ 91.8 Common dividends $ 174.0 $ 73.0 Powell Panther Corporation: Balance Sheets as of December 31 (Millions of Dollars) 2018 2017 Assets Cash and equivalents $ 23.0 $ 18.0 Accounts receivable 248.0 225.0 Inventories 396.0 360.0 Total current assets $ 667.0 $ 603.0 Net plant and equipment 429.0 390.0 Total assets $ 1,096.0 $ 993.0 Liabilities and Equity Accounts payable $ 104.0 $ 90.0 Accruals 144.0 120.0 Notes payable 36.0 30.0 Total current liabilities $ 284.0 $ 240.0 Long-term bonds 360.0 300.0 Total liabilities $ 644.0 $ 540.0 Common stock 404.8 425.0 Retained earnings 47.2 28.0 Common equity $ 452.0 $ 453.0 Total liabilities and equity $ 1,096.0 $ 993.0 Write out your answers completely. For example, 25 million should be entered as 25,000,000. Round your answers to the nearest dollar, if necessary. Negative values, if any, should be indicated by a minus sign. What was net operating working capital for 2017 and 2018? Assume the firm has no excess cash. 2017: $ 2018: $ What was the 2018 free cash flow? $ How would you explain the large increase in 2018 dividends? The large increase in net income from 2017 to 2018 explains the large increase in 2018 dividends. The large increase in EBIT from 2017 to 2018 explains the large increase in 2018 dividends. The large increase in sales from 2017 to 2018 explains the large increase in 2018 dividends. The large increase in retained earnings from 2017 to 2018 explains the large increase in 2018 dividends. The large increase in free cash flow from 2017 to 2018 explains the large increase in 2018 dividends.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter7: Operating Assets

Section: Chapter Questions

Problem 24CE

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Question

Financial information for Powell Panther Corporation is shown below:

Powell Panther Corporation: Income Statements for Year Ending December 31 (Millions of Dollars)

2018

2017

Sales

1,800.0

1,500.0

Operating costs excluding depreciation and amortization

1,395.0

1,275.0

EBITDA

405.0

225.0

Depreciation and amortization

43.0

39.0

Earnings before interest and taxes (EBIT)

362.0

186.0

Interest

40.0

33.0

Earnings before taxes (EBT)

322.0

153.0

Taxes (40%)

128.8

61.2

Net income

193.2

91.8

Common dividends

174.0

73.0

Powell Panther Corporation: Balance Sheets as of December 31 (Millions of Dollars)

2018

2017

Assets

Cash and equivalents

23.0

18.0

Accounts receivable

248.0

225.0

Inventories

396.0

360.0

Total current assets

667.0

603.0

Net plant and equipment

429.0

390.0

Total assets

1,096.0

993.0

Liabilities and Equity

Accounts payable

104.0

90.0

Accruals

144.0

120.0

Notes payable

36.0

30.0

Total current liabilities

284.0

240.0

Long-term bonds

360.0

300.0

Total liabilities

644.0

540.0

Common stock

404.8

425.0

Retained earnings

47.2

28.0

Common equity

452.0

453.0

Total liabilities and equity

1,096.0

993.0

Write out your answers completely. For example, 25 million should be entered as 25,000,000. Round your answers to the nearest dollar, if necessary. Negative values, if any, should be indicated by a minus sign.

What was net operating working capital for 2017 and 2018? Assume the firm has no excess cash.

2017: $

2018: $
What was the 2018 free cash flow?

$
How would you explain the large increase in 2018 dividends?
1. The large increase in net income from 2017 to 2018 explains the large increase in 2018 dividends.
2. The large increase in EBIT from 2017 to 2018 explains the large increase in 2018 dividends.
3. The large increase in sales from 2017 to 2018 explains the large increase in 2018 dividends.
4. The large increase in retained earnings from 2017 to 2018 explains the large increase in 2018 dividends.
5. The large increase in free cash flow from 2017 to 2018 explains the large increase in 2018 dividends.

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