Question

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

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.

$ ???

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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