Financial information for Powell Panther Corporation is shown below:
Powell Panther Corporation: Income Statements for Year Ending December 31 (Millions of Dollars)
2019 | 2018 | |||
Sales | $ | 2,990.0 | $ | 2,600.0 |
Operating costs excluding depreciation and amortization | 2,243.0 | 2,210.0 | ||
EBITDA | $ | 747.0 | $ | 390.0 |
Depreciation and amortization | 80.0 | 73.0 | ||
Earnings before interest and taxes (EBIT) | $ | 667.0 | $ | 317.0 |
Interest | 65.8 | 57.2 | ||
Earnings before taxes (EBT) | $ | 601.2 | $ | 259.8 |
Taxes (25%) | 240.5 | 103.9 | ||
Net income | $ | 360.7 | $ | 155.9 |
Common dividends | $ | 324.6 | $ | 124.7 |
Powell Panther Corporation: Balance Sheets as of December 31 (Millions of Dollars)
2019 | 2018 | |||
Assets | ||||
Cash and equivalents | $ | 41.0 | $ | 34.0 |
Accounts receivable | 358.0 | 286.0 | ||
Inventories | 458.0 | 416.0 | ||
Total current assets | $ | 857.0 | $ | 736.0 |
Net plant and equipment | 801.0 | 728.0 | ||
Total assets | $ | 1,658.0 | $ | 1,464.0 |
Liabilities and Equity | ||||
Accounts payable | $ | 172.0 | $ | 156.0 |
Accruals | 98.0 | 78.0 | ||
Notes payable | 59.8 | 52.0 | ||
Total current liabilities | $ | 329.8 | $ | 286.0 |
Long-term bonds | 598.0 | 520.0 | ||
Total liabilities | $ | 927.8 | $ | 806.0 |
Common stock | 647.3 | 611.2 | ||
Retained earnings | 82.9 | 46.8 | ||
Common equity | $ | 730.2 | $ | 658.0 |
Total liabilities and equity | $ | 1,658.0 | $ | 1,464.0 |
Write out your answers completely. For example, 25 million should be entered as 25,000,000. Round your answers to the nearest dollar, if necessary. Negative values, if any, should be indicated by a minus sign.
What was net operating working capital for 2018 and 2019? Assume the firm has no excess cash.
2018: $
2019: $
What was the 2019 free cash flow?
$
How would you explain the large increase in 2019 dividends?
Net operating working capital of 2018 (Millions of dollars)
Net operating working capital =operating current asset-operating current liability
operating current asset =cash &cash equivalents +inventory +accounts receivable
=$34+$286+$416
=$736
operating current liability =accounts payable +Accruals
=$156+$78
=$234
Net operating working capital of 2018 =$736-$234
=$502
Note :Note payable is a non operating current liability
Net operating working capital of 2019 (Millions of dollars)
Net operating working capital =operating current asset-operating current liability
operating current asset =cash &cash equivalents +inventory +accounts receivable
=$41+$358+$458
=$857
operating current liability =accounts payable +Accruals
=$172+$98
=$270
Net operating working capital of 2019 =$857-$270
=$587
Note :Note payable is a non operating current liability
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