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FREE CASH FLOW Financial information for Powell Panther Corporation is shown here. Powell Panther Corporation: Income Statements for Year Ending December 31 (Millions of Dollars) 2016 2015 Sales $1,200,0 $1,000,0 Operating costs excluding depreciation and amortization 1,020.0 850.0 EBTTDA $ 180.0 $ 150.0 Depreciation & amortization 30.0 25.0 Earnings before interest and taxes (EBIT) $ 150.0 $ 125.0 Interest 21.7 20.2 Earnings before taxes (EBT) $ 128.3 $ 104.8 Taxes (40%) 51.3 41.9 Net income $ 77.0 $ 62.9 Powell Panther Corporation: Balance Sheets as of December 31 (Millions of Dollars) 2016 2015 Assets Cash and equivalents $ 12.0 $ 10.0 Accounts receivable 180.0 150.0 Inventories 180.0 200.0 Total current assets $372.0 $360.0 Net plant and equipment 300.0 250.0 Total assets $672.0 $610.0 Liabilities and Equity Accounts payable $108.0 $ 90.0 Accruals 72.0 60.0 Notes payable 67.0 51.5 Total current liabilities $247.0 $201.5 Long-term bonds 150.0 150.0 Total liabilities $397.0 $351.5 Common stock (50 million shares) 50.0 50.0 Retained earnings 225.0 208.5 Common equity $275.0 $258.5 Total liabilities and equity $672.0 $610.0 a. What was net operating working capital for 2015 and 2016? b. What was the 2016 free cash flow? c. How would you explain the large increase in 2016 dividends?

BuyFind

Fundamentals of Financial Manageme...

9th Edition
Eugene F. Brigham + 1 other
Publisher: Cengage Learning
ISBN: 9781305635937
BuyFind

Fundamentals of Financial Manageme...

9th Edition
Eugene F. Brigham + 1 other
Publisher: Cengage Learning
ISBN: 9781305635937

Solutions

Chapter
Section
Chapter 3, Problem 17P
Textbook Problem

FREE CASH FLOW Financial information for Powell Panther Corporation is shown here.

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

  2016 2015
Sales $1,200,0 $1,000,0
Operating costs excluding depreciation and amortization 1,020.0 850.0
EBTTDA $ 180.0 $ 150.0
Depreciation & amortization 30.0 25.0
Earnings before interest and taxes (EBIT) $ 150.0 $ 125.0
Interest 21.7 20.2
Earnings before taxes (EBT) $ 128.3 $ 104.8
Taxes (40%) 51.3 41.9
Net income $ 77.0 $ 62.9

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

  2016 2015
Assets    
Cash and equivalents $ 12.0 $ 10.0
Accounts receivable 180.0 150.0
Inventories 180.0 200.0
Total current assets $372.0 $360.0
Net plant and equipment 300.0 250.0
Total assets $672.0 $610.0
Liabilities and Equity    
Accounts payable $108.0 $ 90.0
Accruals 72.0 60.0
Notes payable 67.0 51.5
Total current liabilities $247.0 $201.5
Long-term bonds 150.0 150.0
Total liabilities $397.0 $351.5
Common stock (50 million shares) 50.0 50.0
Retained earnings 225.0 208.5
Common equity $275.0 $258.5
Total liabilities and equity $672.0 $610.0
  1. a. What was net operating working capital for 2015 and 2016?
  2. b. What was the 2016 free cash flow?
  3. c. How would you explain the large increase in 2016 dividends?

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Chapter 3 Solutions

Fundamentals of Financial Management, Concise Edition (MindTap Course List)
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