Quantitative Problem: Rosnan Industries' 2019 and 2018 balance sheets and income statements are shown below. Balance Sheets 2019 2018 Assets Cash and equivalents $120 $105 Accounts receivable 275 300 Inventories 375 250 Total current assets $770 $655 Net plant and equipment 2,300 1,490 Total assets $3,070 $2,145 Liabilities and Equity Accounts payable $150 $85 Accruals 75 50 Notes payable 170 95 Total current liabilities $395 $230 Long-term debt 450 290 Common stock 1,225 1,225 Retained earnings 1,000 400 Total liabilities and equity $3,070 $2,145 Income Statements 2019 2018 Sales $2,285 $1,585 Operating costs excluding depreciation 1,250 1,000 EBITDA $1,035 $585 Depreciation and amortization 100 75 EBIT $935 $510 Interest 63 46 EBT $872 $464 Taxes (25%) 218 116 Net income $654 $348 Dividends paid $54 $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. What is Rosnan's 2019 net operating working capital (NOWC)? $

Fundamentals Of Financial Management, Concise Edition (mindtap Course List)

10th Edition

ISBN:9781337902571

Author:Eugene F. Brigham, Joel F. Houston

Publisher:Eugene F. Brigham, Joel F. Houston

Chapter3: Financial Statements, Cash Flow, And Taxes

Section: Chapter Questions

Problem 19SP

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

Balance Sheets
	2019	2018
Assets
Cash and equivalents	$120	$105
Accounts receivable	275	300
Inventories	375	250
Total current assets	$770	$655
Net plant and equipment	2,300	1,490
Total assets	$3,070	$2,145

Liabilities and Equity
Accounts payable	$150	$85
Accruals	75	50
Notes payable	170	95
Total current liabilities	$395	$230
Long-term debt	450	290
Common stock	1,225	1,225
Retained earnings	1,000	400
Total liabilities and equity	$3,070	$2,145

Income Statements
	2019	2018
Sales	$2,285	$1,585
Operating costs excluding depreciation	1,250	1,000
EBITDA	$1,035	$585
Depreciation and amortization	100	75
EBIT	$935	$510
Interest	63	46
EBT	$872	$464
Taxes (25%)	218	116
Net income	$654	$348

Dividends paid	$54	$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.

What is Rosnan's 2019 net operating working capital (NOWC)?

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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