Rhodes Corporation: Income Statements for Year Ending December 31 (Millions of Dollars) 2020 2019 Sales $11,000 $10,000 Operating costs excluding depreciation Depreciation and amortization Earnings before interest and taxes 9,612 8,728 380 360 $ 1,008 912 Less interest 120 100 Pre-tax income $ 888 $ 812 Taxes (25%) 222 203 Net income available to common stockholders $ 609 $ 666 $ 202 Common dividends $4 200 Rhodes Corporation: Balance Sheets as of December 31 (Millions of Dollars) 2020 2019 Assets Cash $ 550 $ 500 Short-term investments 110 100 Accounts receivable 2,750 2,500 Inventories 1,650 1,500 Total current assets $5,060 $4,600 Net plant and equipment Total assets 3,850 3,500 $8,910 $8,100 Liabilities and Equity Accounts payable Accruals $1,100 $1,000 550 500 Notes payable Total current liabilities 384 200 $2,034 $1,700 Long-term debt Total liabilities 1,100 1,000 $2,700 $3,134 4,312 Common stock 4,400 Retained earnings Total common equity Total liabilities and equity 1,464 $5,776 $8,910 1,000 $5,400 $8,100
Rhodes Corporation: Income Statements for Year Ending December 31 (Millions of Dollars) 2020 2019 Sales $11,000 $10,000 Operating costs excluding depreciation Depreciation and amortization Earnings before interest and taxes 9,612 8,728 380 360 $ 1,008 912 Less interest 120 100 Pre-tax income $ 888 $ 812 Taxes (25%) 222 203 Net income available to common stockholders $ 609 $ 666 $ 202 Common dividends $4 200 Rhodes Corporation: Balance Sheets as of December 31 (Millions of Dollars) 2020 2019 Assets Cash $ 550 $ 500 Short-term investments 110 100 Accounts receivable 2,750 2,500 Inventories 1,650 1,500 Total current assets $5,060 $4,600 Net plant and equipment Total assets 3,850 3,500 $8,910 $8,100 Liabilities and Equity Accounts payable Accruals $1,100 $1,000 550 500 Notes payable Total current liabilities 384 200 $2,034 $1,700 Long-term debt Total liabilities 1,100 1,000 $2,700 $3,134 4,312 Common stock 4,400 Retained earnings Total common equity Total liabilities and equity 1,464 $5,776 $8,910 1,000 $5,400 $8,100
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter9: Long-term Liabilities
Section: Chapter Questions
Problem 103.1C: Leverage Cook Corporation issued financial statements at December 31, 2019, that include the...
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Rhodes Corporation’s financial statements are shown after part f. Suppose the federalplus- state tax corporate tax is 25%. Answer the following questions.
a. What is the
b. What are the amounts of net operating
c. What are the amounts of total net operating capital for both years?
d. What is the
e. What is the ROIC for 2020?
f. 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.)
Transcribed Image Text:Rhodes Corporation: Income Statements for Year Ending December 31
(Millions of Dollars)
2020
2019
Sales
$11,000
$10,000
Operating costs excluding depreciation
Depreciation and amortization
Earnings before interest and taxes
9,612
8,728
380
360
$ 1,008
912
Less interest
120
100
Pre-tax income
$ 888
$ 812
Taxes (25%)
222
203
Net income available to common stockholders
$ 609
$ 666
$ 202
Common dividends
$4
200
Rhodes Corporation: Balance Sheets as of December 31 (Millions of Dollars)
2020
2019
Assets
Cash
$ 550
$ 500
Short-term investments
110
100
Accounts receivable
2,750
2,500
Inventories
1,650
1,500
Total current assets
$5,060
$4,600
Net plant and equipment
Total assets
3,850
3,500
$8,910
$8,100
Liabilities and Equity
Accounts payable
Accruals
$1,100
$1,000
550
500
Notes payable
Total current liabilities
384
200
$2,034
$1,700
Long-term debt
Total liabilities
1,100
1,000
$2,700
$3,134
4,312
Common stock
4,400
Retained earnings
Total common equity
Total liabilities and equity
1,464
$5,776
$8,910
1,000
$5,400
$8,100
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