Rhodes Corporation: Income Statements for Year Ending December 31 (Millions of Dollars)
Solved Question: Rhodes Corporation: Income Statements for Year
Rhodes Corporation: Income Statements for Year Ending December 31 (Millions of Dollars)
2016 2015 Sales $ 6,600.0 $ 5,500.0 Operating costs excluding depreciation 4,950.0 4,675.0 Depreciation and amortization 169.0 154.0 Earnings before interest and taxes $ 1,481.0 $ 671.0 Less Interest 142.0 118.0 Pre-tax income $ 1,339.0 $ 553.0 Taxes (40%) 535.6 221.2 Net income available to common 33 stockholders $ 803.8 dividends $ 723.0 $ 265.0
Rhodes Corporation : Balance Sheets as of December 31 (Millions of Dollars)
2016 2015 Assets Cash $ 79.0 $ 66.0 Short-term investments 34.0 28.0 Accounts receivable 847.0 770.0 Inventories 1,031.0 825.0 Total current assets $ 1,991.0 $ 1,689.0 Net plant and equipment 1,694.0 1,540.0 Total assets $ 3,685.0 $ 3,229.0 Liabilities and Equity current Accounts payable $ 462.0 $ 385.0 38.0 Accruals 443.0 Notes liabilities $ 1,037.0 $ 880.0 Long-term debt 1,320.0 1,100.0 Total liabilities $ 2,357.0 $ 1,980.0 Common stock 1,147.6 1,149.0 Retained earnings 180.4 100.0 Total common equity $ 1,328.0 $ 1,249.0 Total liabilities and equity $ 3,685.0 $ 3,229.0
Using Rhodes Corporation's financial statements (shown above), answer the following questions.
What is the net operating profit after taxes (NOPAT) for 2016? Enter your answer in millions. For example, an answer of $ 1.2 million should be entered as 1.2, not 1,200,000. Round your answer to one decimal place.
$ million
What are the amounts of net operating working capital for both years? Enter your answer in millions. For example, an answer of $ 1.2 million should be entered as 1.2, not 1,200,000. Round your answers to one decimal place.
2016 $ million
2015 $ million
What are the amounts of total net operating capital for both years? Enter your answer in millions. For example, an answer of $ 1.2 million should be entered as 1.2, not 1,200,000. Round your answers to one decimal place.
2016 $ million
2015 $ million
What is the free cash flow for 2016? Enter your answer in millions. For example, an answer of $ 1.2 million should be entered as 1.2, not 1,200,000. Round your answer to one decimal place.
$ million
What is the ROIC for 2016? 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 answer in millions. For example, an answer of $ 1.2 million should be entered as 1.2, not 1,200,000. Round your answers to one decimal place.
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
Net operating profit after taxes (NOPAT) for 2016
NOPAT = EBIT (1- Tax rate)
Amount of net operating working capital for both years
NOWC = operating current assets - operating current liabilities
Operating current assets for 2016 = 1957 millions
Operating current assets for 2015 = 1661 millions
Operating current liabilities for 2016 = 905 millions
Operating current liabilities for 2015 = 770 millions
NOWC for 2016 = 1957 -905 = 1052 millions
NOWC for 2015 = 1661 -770 = 891 millions
Amount of total net operating capital for both years
Operating capital = NOWC + net fixed assets
For 2016 = 1052 + 1694 = 2746 millions
For 2015 = 891 +1540 = 2431 millions
FCF = NOPAT - net investment in operating capital
net investment in operating capital = Operating capital for 2016 - Operating capital for 2015
FCF = 888.6 - (2746 -2431) = 573.60 millions
ROIC = NOPAT / Total net operating capital
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