FREE CASH FLOW

Financial information for Powell Panther Corporation is shownbelow:

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

	2016	2015
Sales	$2,875.0	$2,500.0
Operating costs excluding depreciation and amortization	2,300.0	2,125.0
EBITDA	$575.0	$375.0
Depreciation and amortization	84.0	68.0
Earnings before interest and taxes (EBIT)	$491.0	$307.0
Interest	63.0	55.0
Earnings before taxes (EBT)	$428.0	$252.0
Taxes (40%)	171.2	100.8
Net income	$256.8	$151.2
Common dividends	$231.0	$121.0

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

	2016	2015
Assets
Cash and equivalents	$46.0	$38.0
Accounts receivable	275.0	250.0
Inventories	575.0	500.0
Total current assets	$896.0	$788.0
Net plant and equipment	844.0	675.0
Total assets	$1,740.0	$1,463.0
Liabilities and Equity
Accounts payable	$248.0	$225.0
Accruals	228.0	175.0
Notes payable	58.0	50.0
Total current liabilities	$534.0	$450.0
Long-term bonds	575.0	500.0
Total liabilities	$1,109.0	$950.0
Common stock	560.2	468.0
Retained earnings	70.8	45.0
Common equity	$631.0	$513.0
Total liabilities and equity	$1,740.0	$1,463.0

Write out your answers completely. For example, 25 millionshould be entered as 25,000,000.

1. What was net operating working capital for 2015 and 2016?
   
   2015:  $   
   
   2016:  $   
   
2. What was the 2016 free cash flow?
   
   $   
   
3. How would you explain the large increase in 2016dividends?
   
   1. The large increase in net income from 2015 to 2016 explains thelarge increase in 2016 dividends.
   2. The large increase in free cash flow from 2015 to 2016 explainsthe large increase in 2016 dividends.
   3. The large increase in EBIT from 2015 to 2016 explains the largeincrease in 2016 dividends.
   4. The large increase in sales from 2015 to 2016 explains thelarge increase in 2016 dividends.
   5. The large increase in retained earnings from 2015 to 2016explains the large increase in 2016 dividends.