Quantitative Problem: Rosnan Industries' 2019 and 2018 balance sheets and income statements are shown below.
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 below, 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.
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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 | |
Income Statements | |||
2019 | 2018 | ||
Sales | $2,140 | $1,645 | |
Operating costs excluding depreciation and amortization | 1,250 | 1,000 | |
EBITDA | $890 | $645 | |
Depreciation and amortization | 100 | 75 | |
EBIT | $790 | $570 | |
Interest | 63 | 46 | |
EBT | $727 | $524 | |
Taxes (25%) | 182 | 131 | |
Net income | $545 | $393 | |
Dividends paid | $54 | $48 | |
Addition to retained earnings | $600 | $345 | |
Shares outstanding | 100 | 100 | |
Price | $25.00 | $22.50 | |
WACC | 10.00% | ||
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