Quantitative Problem: Rosnan Industries’ 2013 and 2012 balance sheets

Question 1:Quantitative Problem: Rosnan Industries’ 2013 and 2012 balance sheets and income statements are shown below.Balance Sheets:20132012Cash and equivalents$70 $55 Accounts receivable275 300 Inventories375 350 Total current assets$720 $705 Net plant and equipment2,000 1,490 Total assets$2,720 $2,195 Accounts payable$150 $85 Accruals75 50 Notes payable120 145 Total current liabilities$345 $280 Long-term debt450 290 Common stock1,225 1,225 Retained earnings700 400 Total liabilities and equity$2,720 $2,195 Income Statements:20132012Sales$2,000 $1,500 Operating costs excluding depreciation1,250 1,000 EBITDA$750 $500 Depreciation and amortization100 75 EBIT$650 $425 Interest62 45 EBT$588 $380 Taxes (40%)235 152 Net income$353 $228 Dividends paid$53 $48 Addition to retained earnings$300 $180 Shares outstanding100 100 Price$25.00 $22.50 WACC10.00% The balance in the firm’s cash and equivalents account is needed for operations and is not considered “excess” cash.What is Rosnan’s 2013 net operating working capital (NOWC)?What is Rosnan’s 2013 net working capital (NWC)?Question 2:Balance SheetThe assets of Dallas & Associates consist entirely of current assets and net plant and equipment. The firm has total assets of $2.8 million and net plant and equipment equals $2.3 million. It has notes payable of $145,000, long-term debt of $754,000, and total common equity of $1.55 million. The firm does have accounts payable and accruals on its balance sheet. The firm only finances with debt and common equity, so it has no preferred stock on its balance sheet.Write out your answers completely. For example, 25 million should be entered as 25,000,000.What is the company’s total debt?$ What is the amount of total liabilities and equity that appears on the firm’s balance sheet?$ What is the balance of current assets on the firm’s balance sheet?$ What is the balance of current liabilities on the firm’s balance sheet?$ What is the amount of accounts payable and accruals on its balance sheet? [Hint: Consider this as a single line item on the firm’s balance sheet.]$ What is the firm’s net working capital?$ What is the firm’s net operating working capital?$ What is the monetary difference between your answers to part f and g?

 

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