Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Rosnan Industries' 2017 and 2016 balance sheets and income statements are shown below. Balance Sheets: 2017 2016 Cash and equivalents $100 $85 Accounts receivable 275

Rosnan Industries' 2017 and 2016 balance sheets and income statements are shown below.

Balance Sheets:
2017 2016
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
Accounts payable $150 $85
Accruals 75 50
Notes payable 150 75
Total current liabilities $375 $210
Long-term debt 450 290
Common stock 1,225 1,225
Retained earnings 1,000 400
Total liabilities and equity $3,050 $2,125

Income Statements:
2017 2016
Sales $2,100 $1,700
Operating costs excluding depreciation 1,250 1,000
EBITDA $850 $700
Depreciation and amortization 100 75
EBIT $750 $625
Interest 62 45
EBT $688 $580
Taxes (40%) 275 232
Net income $413 $348
Dividends paid $53 $48
Addition to retained earnings $600 $300
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 2017 free cash flow (FCF)?

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

Nike Inc Strategic Audit SWOT Pestle Competitor And Financial Analysis

Authors: Bankim Chandra Pandey

1st Edition

1973352516, 978-1973352518

More Books

Students also viewed these Accounting questions

Question

DISCHARGE OF A CONTRACT

Answered: 1 week ago