Problem 2-12
Free Cash Flows

Rhodes Corporation: Income Statements for Year EndingDecember 31 (Millions of Dollars)

	2016		2015
Sales	$5,625.0		$4,500.0
Operating costs excluding depreciation	4,781.0		3,825.0
Depreciation and amortization	135.0		117.0
Earnings before interest and taxes	$709.0		$558.0
Less Interest	121.0		97.0
Pre-tax income	$588.0		$461.0
Taxes (40%)	235.2		184.4
Net income available to common stockholders	$352.8		$276.6
Common dividends	$318.0		$221.0

Rhodes Corporation: Balance Sheets as of December 31(Millions of Dollars)

	2016		2015
Assets
Cash	$70.0		$54.0
Short-term investments	29.0		23.0
Accounts receivable	569.0		495.0
Inventories	1,139.0		990.0
Total current assets	$1,807.0		$1,562.0
Net plant and equipment	1,346.0		1,170.0
Total assets	$3,153.0		$2,732.0
Liabilities and Equity
Accounts payable	$338.0		$270.0
Accruals	347.0		315.0
Notes payable	113.0		90.0
Total current liabilities	$798.0		$675.0
Long-term debt	1,125.0		900.0
Total liabilities	$1,923.0		$1,575.0
Common stock	1,112.2		1,074.0
Retained earnings	117.8		83.0
Total common equity	$1,230.0		$1,157.0
Total liabilities and equity	$3,153.0		$2,732.0

Using Rhodes Corporation's financial statements (shown above),answer the following questions.

1. What is the net operating profit after taxes (NOPAT) for 2016?Enter your answer in millions. For example, an answer of $1.2million should be entered as 1.2, not 1,200,000. Round your answerto one decimal place.
   $   million
   
2. What are the amounts of net operating working capital for bothyears? Enter your answer in millions. For example, an answer of$1.2 million should be entered as 1.2, not 1,200,000. Round youranswers to one decimal place.
   2016 $   million
   2015 $   million
   
3. What are the amounts of total net operating capital for bothyears? Enter your answer in millions. For example, an answer of$1.2 million should be entered as 1.2, not 1,200,000. Round youranswers to one decimal place.
   2016 $   million
   2015 $   million
   
4. What is the free cash flow for 2016? Enter your answer inmillions. For example, an answer of $1.2 million should be enteredas 1.2, not 1,200,000. Round your answer to one decimalplace.
   $   million
   
5. What is the ROIC for 2016? Round your answer to two decimalplaces.
   %
   
6. How much of the FCF did Rhodes use for each of the followingpurposes: after-tax interest, net debt repayments, dividends, netstock repurchases, and net purchases of short-term investments?(Hint: Remember that a net use can be negative.) Enteryour answer in millions. For example, an answer of $1.2 millionshould be entered as 1.2, not 1,200,000. Round your answers to onedecimal 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