Financial information for Powell Panther Corporation is shown below: Powell Panther Corporation: Income Statements for Year Ending December 31 (Millions of Dollars) 2018 2017 Sales $ 3,900.0 $ 3,000.0 Operating costs excluding depreciation and amortization 2,925.0 2,550.0 EBITDA $ 975.0 $ 450.0 Depreciation and amortization 90.0 69.0 Earnings before interest and taxes (EBIT) $ 885.0 $ 381.0 Interest 86.0 66.0 Earnings before taxes (EBT) $ 799.0 $ 315.0 Taxes (40%) 319.6 126.0 Net income $ 479.4 $ 189.0 Common dividends $ 431.0 $ 151.0 Powell Panther Corporation: Balance Sheets as of December 31 (Millions of Dollars) 2018 2017 Assets Cash and equivalents $ 38.0 $ 30.0 Accounts receivable 432.0 360.0 Inventories 819.0 630.0 Total current assets $ 1,289.0 $ 1,020.0 Net plant and equipment 897.0 690.0 Total assets $ 2,186.0 $ 1,710.0 Liabilities and Equity Accounts payable $ 207.0 $ 180.0 Accruals 173.0 150.0 Notes payable 78.0 60.0 Total current liabilities $ 458.0 $ 390.0 Long-term bonds 780.0 600.0 Total liabilities $ 1,238.0 $ 990.0 Common stock 842.6 663.0 Retained earnings 105.4 57.0 Common equity $ 948.0 $ 720.0 Total liabilities and equity $ 2,186.0 $ 1,710.0 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 2017 and 2018? Assume the firm has no excess cash. 2017: $ 2018: $ What was the 2018 free cash flow? $ How would you explain the large increase in 2018 dividends? The large increase in net income from 2017 to 2018 explains the large increase in 2018 dividends. The large increase in EBIT from 2017 to 2018 explains the large increase in 2018 dividends. The large increase in sales from 2017 to 2018 explains the large increase in 2018 dividends. The large increase in free cash flow from 2017 to 2018 explains the large increase in 2018 dividends. The large increase in retained earnings from 2017 to 2018 explains the large increase in 2018 dividends.

Financial information for Powell Panther Corporation is shown below: Powell Panther Corporation: Income Statements for Year Ending December 31 (Millions of Dollars) 2018 2017 Sales $ 3,900.0 $ 3,000.0 Operating costs excluding depreciation and amortization 2,925.0 2,550.0 EBITDA $ 975.0 $ 450.0 Depreciation and amortization 90.0 69.0 Earnings before interest and taxes (EBIT) $ 885.0 $ 381.0 Interest 86.0 66.0 Earnings before taxes (EBT) $ 799.0 $ 315.0 Taxes (40%) 319.6 126.0 Net income $ 479.4 $ 189.0 Common dividends $ 431.0 $ 151.0 Powell Panther Corporation: Balance Sheets as of December 31 (Millions of Dollars) 2018 2017 Assets Cash and equivalents $ 38.0 $ 30.0 Accounts receivable 432.0 360.0 Inventories 819.0 630.0 Total current assets $ 1,289.0 $ 1,020.0 Net plant and equipment 897.0 690.0 Total assets $ 2,186.0 $ 1,710.0 Liabilities and Equity Accounts payable $ 207.0 $ 180.0 Accruals 173.0 150.0 Notes payable 78.0 60.0 Total current liabilities $ 458.0 $ 390.0 Long-term bonds 780.0 600.0 Total liabilities $ 1,238.0 $ 990.0 Common stock 842.6 663.0 Retained earnings 105.4 57.0 Common equity $ 948.0 $ 720.0 Total liabilities and equity $ 2,186.0 $ 1,710.0 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 2017 and 2018? Assume the firm has no excess cash. 2017: $ 2018: $ What was the 2018 free cash flow? $ How would you explain the large increase in 2018 dividends? The large increase in net income from 2017 to 2018 explains the large increase in 2018 dividends. The large increase in EBIT from 2017 to 2018 explains the large increase in 2018 dividends. The large increase in sales from 2017 to 2018 explains the large increase in 2018 dividends. The large increase in free cash flow from 2017 to 2018 explains the large increase in 2018 dividends. The large increase in retained earnings from 2017 to 2018 explains the large increase in 2018 dividends.

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter15: Financial Statement Analysis

Section: Chapter Questions

Problem 19BEA

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Question

Financial information for Powell Panther Corporation is shown below:

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

2018

2017

Sales

3,900.0

3,000.0

Operating costs excluding depreciation and amortization

2,925.0

2,550.0

EBITDA

975.0

450.0

Depreciation and amortization

90.0

69.0

Earnings before interest and taxes (EBIT)

885.0

381.0

Interest

86.0

66.0

Earnings before taxes (EBT)

799.0

315.0

Taxes (40%)

319.6

126.0

Net income

479.4

189.0

Common dividends

431.0

151.0

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

2018

2017

Assets

Cash and equivalents

38.0

30.0

Accounts receivable

432.0

360.0

Inventories

819.0

630.0

Total current assets

1,289.0

1,020.0

Net plant and equipment

897.0

690.0

Total assets

2,186.0

1,710.0

Liabilities and Equity

Accounts payable

207.0

180.0

Accruals

173.0

150.0

Notes payable

78.0

60.0

Total current liabilities

458.0

390.0

Long-term bonds

780.0

600.0

Total liabilities

1,238.0

990.0

Common stock

842.6

663.0

Retained earnings

105.4

57.0

Common equity

948.0

720.0

Total liabilities and equity

2,186.0

1,710.0

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 2017 and 2018? Assume the firm has no excess cash.

2017: $

2018: $
What was the 2018 free cash flow?

$
How would you explain the large increase in 2018 dividends?
1. The large increase in net income from 2017 to 2018 explains the large increase in 2018 dividends.
2. The large increase in EBIT from 2017 to 2018 explains the large increase in 2018 dividends.
3. The large increase in sales from 2017 to 2018 explains the large increase in 2018 dividends.
4. The large increase in free cash flow from 2017 to 2018 explains the large increase in 2018 dividends.
5. The large increase in retained earnings from 2017 to 2018 explains the large increase in 2018 dividends.

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