Rhodes Corporation’s financial statements are shown below. Rhodes Corporation: Income Statements for Year Ending December 31 (Millions of Dollars) 2020 2019 Sales $ 12,000 $ 10,000 Operating costs excluding depreciation 10,634 8,702 Depreciation and amortization 410 390 Earnings before interest and taxes $ 956 $ 908 Less interest 260 200 Pre-tax income $ 696 $ 708 Taxes (25%) 174 177 Net income available to common stockholders $ 522 $ 531 Common dividends $ 203 $ 200 Rhodes Corporation: Balance Sheets as of December 31 (Millions of Dollars) 2020 2019 Assets Cash $ 550 $ 500 Short-term investments 220 200 Accounts receivable 2,750 2,500 Inventories 1,550 1,300 Total current assets $ 5,070 $ 4,500 Net plant and equipment 3,650 3,500 Total assets $ 8,720 $ 8,000 Liabilities and Equity Accounts payable $ 1,100 $ 1,000 Accruals 550 500 Notes payable 194 100 Total current liabilities $ 1,844 $ 1,600 Long-term debt 1,100 1,000 Total liabilities $ 2,944 2,600 Common stock 4,457 4,400 Retained earnings 1,319 1,000 Total common equity $ 5,776 $ 5,400 Total liabilities and equity $ 8,720 $ 8,000 Suppose the federal-plus-state tax corporate tax is 25%. Answer the following questions. What is the net operating profit after taxes (NOPAT) for 2020? Enter your answer in millions. For example, an answer of $1 million should be entered as 1, not 1,000,000. Round your answer to the nearest whole number. $ million What are the amounts of net operating working capital for both years? Enter your answers in millions. For example, an answer of $1 million should be entered as 1, not 1,000,000. Round your answers to the nearest whole number. 2020: $ million 2019: $ million What are the amounts of total net operating capital for both years? Enter your answers in millions. For example, an answer of $1 million should be entered as 1, not 1,000,000. Round your answers to the nearest whole number. 2020: $ million 2019: $ million What is the free cash flow for 2020? Enter your answer in millions. For example, an answer of $1 million should be entered as 1, not 1,000,000. Cash outflow, if any, should be indicated by a minus sign. Round your answer to the nearest whole number. $ million What is the ROIC for 2020? Round your answer to two decimal places. % 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 answers in millions. For example, an answer of $1 million should be entered as 1, not 1,000,000. Round your answers to the nearest whole number. After-tax interest payment $ million Reduction (increase) in debt $ million Payment of dividends $ million Repurchase (Issue) stock $ million Purchase (Sale) of short-term investments $ million

Rhodes Corporation’s financial statements are shown below. Rhodes Corporation: Income Statements for Year Ending December 31 (Millions of Dollars) 2020 2019 Sales $ 12,000 $ 10,000 Operating costs excluding depreciation 10,634 8,702 Depreciation and amortization 410 390 Earnings before interest and taxes $ 956 $ 908 Less interest 260 200 Pre-tax income $ 696 $ 708 Taxes (25%) 174 177 Net income available to common stockholders $ 522 $ 531 Common dividends $ 203 $ 200 Rhodes Corporation: Balance Sheets as of December 31 (Millions of Dollars) 2020 2019 Assets Cash $ 550 $ 500 Short-term investments 220 200 Accounts receivable 2,750 2,500 Inventories 1,550 1,300 Total current assets $ 5,070 $ 4,500 Net plant and equipment 3,650 3,500 Total assets $ 8,720 $ 8,000 Liabilities and Equity Accounts payable $ 1,100 $ 1,000 Accruals 550 500 Notes payable 194 100 Total current liabilities $ 1,844 $ 1,600 Long-term debt 1,100 1,000 Total liabilities $ 2,944 2,600 Common stock 4,457 4,400 Retained earnings 1,319 1,000 Total common equity $ 5,776 $ 5,400 Total liabilities and equity $ 8,720 $ 8,000 Suppose the federal-plus-state tax corporate tax is 25%. Answer the following questions. What is the net operating profit after taxes (NOPAT) for 2020? Enter your answer in millions. For example, an answer of $1 million should be entered as 1, not 1,000,000. Round your answer to the nearest whole number. $ million What are the amounts of net operating working capital for both years? Enter your answers in millions. For example, an answer of $1 million should be entered as 1, not 1,000,000. Round your answers to the nearest whole number. 2020: $ million 2019: $ million What are the amounts of total net operating capital for both years? Enter your answers in millions. For example, an answer of $1 million should be entered as 1, not 1,000,000. Round your answers to the nearest whole number. 2020: $ million 2019: $ million What is the free cash flow for 2020? Enter your answer in millions. For example, an answer of $1 million should be entered as 1, not 1,000,000. Cash outflow, if any, should be indicated by a minus sign. Round your answer to the nearest whole number. $ million What is the ROIC for 2020? Round your answer to two decimal places. % 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 answers in millions. For example, an answer of $1 million should be entered as 1, not 1,000,000. Round your answers to the nearest whole number. After-tax interest payment $ million Reduction (increase) in debt $ million Payment of dividends $ million Repurchase (Issue) stock $ million Purchase (Sale) of short-term investments $ million

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter2: Financial Statements, Cash Flow,and Taxes

Section: Chapter Questions

Problem 18P: Rhodes Corporations financial statements are shown after part f. Suppose the federal-plus-state tax...

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Question

Rhodes Corporation’s financial statements are shown below.

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

	2020		2019
Sales	$	12,000		$	10,000
Operating costs excluding depreciation		10,634			8,702
Depreciation and amortization		410			390
Earnings before interest and taxes	$	956		$	908
Less interest		260			200
Pre-tax income	$	696		$	708
Taxes (25%)		174			177
Net income available to common stockholders	$	522		$	531
Common dividends	$	203		$	200

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

	2020		2019
Assets
Cash	$	550		$	500
Short-term investments		220			200
Accounts receivable		2,750			2,500
Inventories		1,550			1,300
Total current assets	$	5,070		$	4,500
Net plant and equipment		3,650			3,500
Total assets	$	8,720		$	8,000

Liabilities and Equity
Accounts payable	$	1,100		$	1,000
Accruals		550			500
Notes payable		194			100
Total current liabilities	$	1,844		$	1,600
Long-term debt		1,100			1,000
Total liabilities	$	2,944			2,600
Common stock		4,457			4,400
Retained earnings		1,319			1,000
Total common equity	$	5,776		$	5,400
Total liabilities and equity	$	8,720		$	8,000

Suppose the federal-plus-state tax corporate tax is 25%. Answer the following questions.

What is the net operating profit after taxes (NOPAT) for 2020? Enter your answer in millions. For example, an answer of $1 million should be entered as 1, not 1,000,000. Round your answer to the nearest whole number.
$ million
What are the amounts of net operating working capital for both years? Enter your answers in millions. For example, an answer of $1 million should be entered as 1, not 1,000,000. Round your answers to the nearest whole number.
2020: $ million

2019: $ million
What are the amounts of total net operating capital for both years? Enter your answers in millions. For example, an answer of $1 million should be entered as 1, not 1,000,000. Round your answers to the nearest whole number.
2020: $ million

2019: $ million
What is the free cash flow for 2020? Enter your answer in millions. For example, an answer of $1 million should be entered as 1, not 1,000,000. Cash outflow, if any, should be indicated by a minus sign. Round your answer to the nearest whole number.
$ million
What is the ROIC for 2020? Round your answer to two decimal places.
%

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 answers in millions. For example, an answer of $1 million should be entered as 1, not 1,000,000. Round your answers to the nearest whole number.

After-tax interest payment	$ million
Reduction (increase) in debt	$ million
Payment of dividends	$ million
Repurchase (Issue) stock	$ million
Purchase (Sale) of short-term investments	$ million

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