Question

Powell Panther Corporation: Income Statements for Year Ending December 31 (Millions of Dollars) 2018 2017 Sales $2,310.0 $2,100.0 Operating costs excluding depreciation and amortization 1785.0 1,733.0 $ 577.0 $ 315.0 EBITDA Depreciation and amortization 53.0 46.0 $ 269.0 Earnings before interest and taxes (EBIT) 524.0 Interest 51.0 46.0 Earnings before taxes (EBT) 473.0 223.0 Taxes (40%) 189.2 89.2. Net income $ 283.8 $ 133.8 Common dividends $255.0 $107.0 Powell Panther Corporation: Balance Sheets as of December 31 (Millions of Dollars) 2017 2018 Assets Cash and equivalents $ 29.0 23.0 Accounts receivable 338.0 294.0 Inventories 437.0 336.0 Total current assets 804.0 $ 653.0 Net plant and equipment 531.0 462.0 Total assets $1,115.0 1,335.0 Liabilities and Equity Accounts payable 151.0 126.0 Accruals 121.0 105.0 Notes payable 46.0 42.0 Total current liabilities 318.0 $ 273.0 Long-term bonds 462.0 420.0 Total liabilities 780.0 693.0 Common stock 382.0 486.2 Retained earnings 68.8 40.0 Common equity $ 555.0 422.0 Total liabilities and equity $ 1,335.0 $1,115.0

Answer 1

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640 422 NPV, IRR, PBP,OCFINDEX - Microsoft Excel (Product Activation Failed) File Home Insert Page Layout Formulas Data Review View Add-Ins - 2x % Cut Σ AutoSum : A Calibri 11 A A = = = V Wrap Text General Ea Copy Fill Paste B I U B- A SF Merge Merge & Center - Center $ -% % 4:0 .00 . Conditional Format Format Painter Cell Insert Delete Format Sort & Find & Formatting as Table Styles 2 Clear Filter Select Clipboard Font Alignment CD Number Styles Cells Editing CK642 - fix И СА СВсс CE CF CG CH CI CJ CK 638 639 NET OPERATING WORKING CAPITAL = CURRENT ASSETS - (CURRENT LIABILITIES - NOTES PAYABLE) NET OPERATING WORKING CAPITAL = 2017 = 653 - (273-42) = 641 2018 = 804 - (318-46) = 532 642 ANSWER NET OPERATING WORKING CAPITAL = 2017= 422000000 643 2018= 532000000 644 645 CHANGE IN NET OPERATING WORKING CAPITAL = 532-422 = 110 646 647 CAPITAL EXPENDITURE = NET FIXED ASSETS IN 2018 + DEPRECIATION FOR 2018 - NET FIXED ASSETS IN 2017 648 531 + 53 -462 = 122 649 650 FREE CASH FLOW = EBIT(1-t) + DEPRECIATION - CAPITAL EXPENDITURE - CHANGE IN NET OPERATING WORKING CAPITAL 651 524*(1-0.40) + 53 - 122 - 110 = 135.4 652 653 ANSWER FREE CASH FLOW = 135400000 654 655 ANSWER I. The large increase in free cash flow from 2017 to 2018 explains the large increase in 2018 dividends. 656 CASH FLOW SHOWS HOW MUCH FREE CASH AVAILABLE WITH COMPANY TO PAY TO ITS SHAREHOLDERS 657 NET INCOME, EBIT, RETAINED EARNINGS MAY BE HIGHER BUT THEY MAY NOT BE IN CASH FORM 658 O CF CASH FLOW STATW FCFARM, MSI,confidenceINDEX CURRENCY LOAN CROSS OVER HEDGING MONEY MARKET GM HPR AM TAX GROWTH SUST PREF AND DIV POLICYI Rea ferences BO 120% _ 2. B 9 . * * O ENG 24-11-2019 H