See attached file for financial data.
Using Rhodes Corporation's financial statements, answer the following questions.
a. What is the net operating profit after taxes (NOPAT) for 2010?
b. What are the amounts of net operating working capital for both years?
c. What are the amounts of total net operating capital for both years?
d. What is the free cash flow for 2010?
e. What is the ROIC for 2010?
f. How much of the FCF did Rhodes use for each of the following purposes: after-tax interest, net debt repayments, dividends, net stock repurchases, and net purchases of short-term investments? (Hint: Remember that a net use can lie negative.)
The solution explains the calculation of operating profit, working capital, free cash flow, ROIC
Geraldo Corporation's audited financial statements
Geraldo, a calendar-year, accrual-basis corporation reported $931,000 net income before tax on its audited financial statements. Its records reveal the following information:
- On February 1, Geraldo purchased a business and capitalized $500,000 of the cost to goodwill.
- Book depreciation expense was $66,100, and MACRS depreciation was $77,800.
- Geraldo paid an $18,500 premium for its employee group term life insurance plan and a $5,900 premium for its key-person life insurance policies.
- Geraldo accrued a $35,000 expense for the estimated settlement of a breach-of-contract suit that should go to court next year.
a. Compute Geraldo's taxable income.
b. Compute Geraldo's federal tax expense per books and federal tax payable.
c. Explain why tax liability and book-tax expense are different and indicate whether the difference is permanent or temporary.