Question

Problem 2-39 Free Cash Flow (LG2-5) Rebecky's Flowers 4U, Inc., had free cash flows during 2021 of $61 million, NOPAT of $125 million, and depreciation of $15 million. Using this information, fill in the blanks on Rebecky's balance sheet below. (Enter your answers in millions of dollars.) 2021 2020 Assets Current assets: Cash and marketable securities Accounts receivable 37 $ 50 75 Inventory REBECKY'S FLOWERS 4U, INC. Balance Sheet as of December 31, 2021 and 2020 (in millions of dollars) 2021 2020 Liabilities and Equity Current liabilities: $ 28 $ 25 Accrued wages and taxes 80 70 Accounts payable 135 115 Notes payable $ 243 $ 210 Total Long-term debt: S 410 $ 360 Stockholders' equity: 45 30 Preferred stock (4 million shares) S 365 $ 330 Common stock and paid-in surplus (10 million shares) 90 90 Retained earnings $ 455 $ 420 Total $ 698 $ 630 Total liabilities and equity S 160 : 271 Total Fixed assets: Gross plant and equipment Less: Depreciation Net plant and equipment Other long-term assets Total - 20 212 236 698 20 175 199 630 $ $ $ $ Total assets

Answer 1

(a) Operating cash flow = NOPAT + Depreciation

Operating cash flow = 125+15 = $ 140 million

(b) Free cash flow = Operating cash flow - Investment in operating capital

Investment in operating capital = 140 - 61= $ 79 million

(c) Investment in operating capital = ΔGross fixed assets + ΔNet operating working capital

ΔNet operating working capital = 79 - ( 410-360) = $ 29 million

(d) ΔNet operating working capital =Δ Current Asset - Δ Current Liabilities

Δ Current Liabilities = (243-210) - 29 = $ 4 million

(e) Δ Current Liabilities = 2020 Current liabilities - 2021Current liabilities

  2021 Current liabilities = 140+04 = $ 144 million

(f) 2021 Current liabilities = Accrued wages and taxes + Account payable + Note payable

Account payable = 144 - ( 37+75) = $ 32 million

(g) Long term debt =   Total liabilities and equity- Stockholders’ equity - Current liabilities

Long term debt =698 -236 - 144= $ 318 million