Rhodes Corporation: Income Statements for Year Ending December 31 (Millions of Dollars)
2016 | 2015 | ||
Sales | $6,325.0 | $5,500.0 | |
Operating costs excluding depreciation | 5,376.0 | 4,675.0 | |
Depreciation and amortization | 207.0 | 160.0 | |
Earnings before interest and taxes | $742.0 | $665.0 | |
Less: Interest | 136.0 | 118.0 | |
Pre-tax income | $606.0 | $547.0 | |
Taxes (40%) | 242.4 | 218.8 | |
Net income available to common stockholders | $363.6 | $328.2 | |
Common dividends | $327.0 | $263.0 |
Rhodes Corporation: Balance Sheets as of December 31 (Millions of Dollars)
2016 | 2015 | ||
Assets | |||
Cash | $76.0 | $61.0 | |
Short-term investments | 32.0 | 28.0 | |
Accounts receivable | 886.0 | 770.0 | |
Inventories | 1,513.0 | 1,375.0 | |
Total current assets | $2,507.0 | $2,234.0 | |
Net plant and equipment | 2,074.0 | 1,595.0 | |
Total assets | $4,581.0 | $3,829.0 | |
Liabilities and Equity | |||
Accounts payable | $413.0 | $330.0 | |
Accruals | 358.0 | 275.0 | |
Notes payable | 127.0 | 110.0 | |
Total current liabilities | $898.0 | $715.0 | |
Long-term bonds | 1,265.0 | 1,100.0 | |
Total liabilities | $2,163.0 | $1,815.0 | |
Common stock | 2,283.4 | 1,916.0 | |
Retained earnings | 134.6 | 98.0 | |
Total common equity | $2,418.0 | $2,014.0 | |
Total liabilities and equity | $4,581.0 | $3,829.0 |
Using Rhodes Corporation's financial statements (shown above), answer the following questions.
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 |
a]
NOPAT = EBIT * (1 - tax rate)
2016 NOPAT = $742.0 * (1 - 40%) = $445.2 million
b]
net operating working capital = Total current assets - Total current liabilities
2016 = $2507 - $898 = $1609 million
2015 = $2234 - $715 = $1519 million
c]
total net operating capital = net operating working capital + non-current assets
non-current assets = net plant and equipment
2016 = $1609 million + $2074 million = $3683 million
2015 = $1519 million + $1595 million = $3114 million
d]
FCF = net income + Depreciation and amortization - change in working capital
change in working capital = change in total current assets - change in total current liabilities = ($2507 - $2234) - ($898- $715) = $90 million
FCF = $363.6 million + $207.0 million - $90 million = $480.6 million
Rhodes Corporation: Income Statements for Year Ending December 31 (Millions of Dollars) 2016 2015 Sales $6,325.0...
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Using Rhodes Corporation's financial statements (shown above), answer the following questions. Rhodes Corporation: Income Statements for Year Ending December 31 (Millions of Dollars) 2016 2015 $8,450.0$6,500.0 5,525.0 163.0 $812.0 140.0 $672.0 268.8 $403.2 $323.0 Sales Operating costs excluding depreciation Depreciation and amortization 6,760.0 195.0 $1,495.0 182.0 $1,313.0 525.2 $787.8 $709.0 Earnings before interest and taxes Less Interest Pre-tax income Taxes (40%) Net income available to common stockholders Common dividends Rhodes Corporation: Balance Sheets as of December 31 (Millions of Dollars)...
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