Powell Panther Corporation: Income Statements for Year Ending December 31 (Millions of Dollars) 2019 2018 Sales $ 2,040.0 $ 1,700.0 Operating costs excluding depreciation and amortization 1,734.0 1,445.0 EBITDA $ 306.0 $ 255.0 Depreciation and amortization 39.0 36.0 Earnings before interest and taxes (EBIT) $ 267.0 $ 219.0 Interest 44.9 37.4 Earnings before taxes (EBT) $ 222.1 $ 181.6 Taxes (25%) 88.8 72.6 Net income $ 133.3 $ 109.0 Common dividends $ 120.0 $ 87.2 Powell Panther Corporation: Balance Sheets as of December 31 (Millions of Dollars) 2019 2018 Assets Cash and equivalents $ 21.0 $ 17.0 Accounts receivable 262.0 238.0 Inventories 430.0 391.0 Total current assets $ 713.0 $ 646.0 Net plant and equipment 393.0 357.0 Total assets $ 1,106.0 $ 1,003.0 Liabilities and Equity Accounts payable $ 213.0 $ 170.0 Accruals 191.0 153.0 Notes payable 40.8 34.0 Total current liabilities $ 444.8 $ 357.0 Long-term bonds 408.0 340.0 Total liabilities $ 852.8 $ 697.0 Common stock 207.2 273.3 Retained earnings 46.0 32.7 Common equity $ 253.2 $ 306.0 Total liabilities and equity $ 1,106.0 $ 1,003.0 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.

Power Panther Corporation

a) Computation of the net operating working capital for 2018 and 2019

                                            2019         2018

Total current assets         $713.0      $646.0

Total current liabilities    $444.8       $357.0

Net operating working  

 capital                           $268.2      $258.0

Explanation:

a) Data and Calculations:

1. Powell Panther Corporation: Income Statements for Year Ending December 31 (Millions of Dollars)    2019        2018

Sales                                             $ 2,040.0   $ 1,700.0

Operating costs excluding

depreciation and amortization       1,734.0      1,445.0

EBITDA                                            $ 306.0    $ 255.0

Depreciation and amortization           39.0          36.0

Earnings before interest

and taxes (EBIT)                            $ 267.0      $ 219.0

Interest                                                44.9            37.4

Earnings before taxes (EBT)         $ 222.1        $ 181.6

Taxes (25%)                                        88.8            72.6

Net income                                     $ 133.3       $ 109.0

Common dividends                       $ 120.0         $ 87.2

Contribution to retained earnings $13.3          $21.8

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

Assets                                              2019         2018

Cash and equivalents                    $ 21.0       $ 17.0

Accounts receivable                      262.0       238.0

Inventories                                     430.0         391.0

Total current assets                    $ 713.0     $ 646.0

Net plant and equipment              393.0        357.0

Total assets                              $ 1,106.0   $ 1,003.0

Liabilities and Equity

Accounts payable                      $ 213.0       $ 170.0

Accruals                                          191.0          153.0

Notes payable                                40.8            34.0

Total current liabilities              $ 444.8       $ 357.0

Long-term bonds                         408.0          340.0

Total liabilities                           $ 852.8       $ 697.0

Common stock                             207.2          273.3

Retained earnings                          46.0            32.7

Common equity                        $ 253.2       $ 306.0

Total liabilities and equity       $ 1,106.0     $ 1,003.0

b) Powell Panther Corporation has the net operating working capital as the excess of current assets over current liabilities.  It shows how liquid Powell Panther is and also its ability to settle its currently maturing current liabilities with its operating assets.

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