Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Quantitative Problem: Rosnan Industries' 2019 and 2018 balance sheets and income statements are shown below. Balance Sheets Assets 2019 2018 Cash and equivalents $100 $85

Quantitative Problem: Rosnan Industries' 2019 and 2018 balance sheets and income statements are shown below.

Balance Sheets
Assets 2019 2018
Cash and equivalents $100 $85
Accounts receivable 275 300
Inventories 375 250
Total current assets $750 $635
Net plant and equipment 2,300 1,490
Total assets $3,050 $2,125
Liabilities and Equity
Accounts payable $150 $85
Accruals 75 50
Notes payable 150 75
Total current liabilities $375 $210
Long-term debt 450 290
Total liabilities 825 500
Common stock 1,225 1,225
Retained earnings 1,000 400
Common equity 2,225 1,625
Total liabilities and equity $3,050 $2,125

Income Statements
2019 2018
Sales $2,345 $1,390
Operating costs excluding depreciation and amortization 1,250 1,000
EBITDA $1,095 $390
Depreciation and amortization 100 75
EBIT $995 $315
Interest 63 46
EBT $932 $269
Taxes (25%) 233 67
Net income $699 $202
Dividends paid $54 $48
Addition to retained earnings $600 $153.75
Shares outstanding 100 100
Price $25.00 $22.50
WACC 10.00%

The balance in the firm's cash and equivalents account is needed for operations and is not considered "excess" cash.

Using the financial statements given above, what is Rosnan's 2019 free cash flow (FCF)? Use a minus sign to indicate a negative FCF. Round your answer to the nearest cent.

$

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Valuation Workbook Step By Step Exercises And Tests To Help You Master Valuation

Authors: McKinsey & Company Inc.

7th Edition

1119611814, 978-1119611813

More Books

Students also viewed these Finance questions

Question

1. What are the four types of adjusting entries?

Answered: 1 week ago

Question

1. Does your voice project confidence? Authority?

Answered: 1 week ago