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FCF - GLIZETTE SAMANIEGO

The document contains the income statement and balance sheet for Allied Food Products and Prowell Panther Corporation for years 2014 and 2015. Net sales for Allied Food Products increased from $1,000 million in 2014 to $1,200 million in 2015. Operating income increased from $125 million to $150 million over the same period. Net income increased from $62.9 million to $77 million. Common dividends paid also increased substantially from $46.4 million in 2014 to $60.5 million in 2015. The balance sheet for Prowell Panther Corporation shows total assets increasing from $610 million in 2014 to $672 million in 2015. Total liabilities also increased from $351.5 million

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Glizette Samaniego
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98 views4 pages

FCF - GLIZETTE SAMANIEGO

The document contains the income statement and balance sheet for Allied Food Products and Prowell Panther Corporation for years 2014 and 2015. Net sales for Allied Food Products increased from $1,000 million in 2014 to $1,200 million in 2015. Operating income increased from $125 million to $150 million over the same period. Net income increased from $62.9 million to $77 million. Common dividends paid also increased substantially from $46.4 million in 2014 to $60.5 million in 2015. The balance sheet for Prowell Panther Corporation shows total assets increasing from $610 million in 2014 to $672 million in 2015. Total liabilities also increased from $351.5 million

Uploaded by

Glizette Samaniego
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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ALLIED FOOD PRODUCTS

Statement of Comprehensive Income


(in millions)
2015 2014

Net Sales 1,200.00 1,000.00


Operating Costs except depreciation and amortization 1,020.00 850.00
Depreciation and Amortization 30.00 25.00
Total operating costs 1,050.00 875.00
Operating income, or earnings before interest and taxes (EBIT) 150.00 125.00
Less Interest 21.70 20.20
Earnings before taxes (EBT) 128.30 104.80
Taxes (40%) 51.30 41.90
Net Income 77.00 62.90
Common Dividends 60.50 46.40

Prowell Panther Corporation


Statement of Financial Position
(in millions)
ASSETS 2015 2014
Current Assets
Cash and equivalents 12.00 10.00
Accounts Receivable 180.00 150.00
Inventories 180.00 200.00
Total Current Assets 372.00 360.00
Non-Current Assets
Net Plant and equipment 300.00 250.00
TOTAL ASSETS 672.00 610.00

LIABILITIES AND EQUITIES


Current Liabilities
Accounts Payable 108.00 90.00
Accruals 72.00 60.00
Notes Payables 67.00 51.50
Total Current Liabilities 247.00 201.50
Long Term bonds 150.00 150.00
Total Liabilities 397.00 351.50
Common Equity
Common Stocks (50 million shares) 50.00 50.00
Retained Earnings 225.00 208.50
Total Common Equity 275.00 258.50
TOTAL LIABILITIES AND EQUITY 672.00 610.00
Required
A. What was the net Operating working Capital for 2014 and 2015
B. What was the 2015 FCF?
C. How would you explain the large increase in 2015 dividends?

A. What was the net Operating working Capital for 2014 and 2015

Net Operating working capital (2014) = CA - ( CL - NP )


= 360.00 - (201.50 - 51.50)
= 360.00-150.00
= 210.00

Net Operating working capital (2015) = CA - ( CL - NP )


= 372.00 - (247.00 - 67.00)
= 372.00-180.00
= 192.00

B. What was the 2015 FCF?

Free Cash Flow = [Ebit( 1-T) + Depreciation and Amortization]


- [ Capital Expenditure + Net Operating Working Capital]

= NOPAT + Depreciation and Amortization]


- [ Capital Expenditure + Net Operating Working Capital]

= [90.00 + 30.00] - [80.00 + (-18.00) ]


= 120.00 - 62.00
= 58.00

NOPAT = Ebit ( 1 - T )
= 150.00 ( 1 - 40% )
= 150.00 (0.60)
= 90.00

Capital Expenditure = (Current PPE - Prior PPE) + Depreciation


= (300.00 - 250.00) + 30.00
= 50.00 + 30.00
= 80.00

Net Operating Working Capital = 192.00-210.00


= -18.00
C. How would you explain the large increase in 2015 dividends?

Due to increase in the Company's Net Income there are more funds to render out dividends.
Working Capital]

Working Capital]

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