Business, 29.01.2021 01:50 alyviariggins

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)? Quantitative Problem: Rosnan Industries' 2013 and 2012 balance sheets and income statements are shown below.

Balance Sheets:
2013 2012
Cash and equivalents $70 $55
Accounts receivable 275 300
Inventories 375 350
Total current assets $720 $705
Net plant and equipment 2,000 1,490
Total assets $2,720 $2,195

Accounts payable $150 $85
Accruals 75 50
Notes payable 120 145
Total current liabilities $345 $280
Long-term debt 450 290
Common stock 1,225 1,225
Retained earnings 700 400
Total liabilities and equity $2,720 $2,195

Income Statements:
2013 2012
Sales $2,000 $1,500
Operating costs excluding depreciation 1,250 1,000
EBITDA $750 $500
Depreciation and amortization 100 75
EBIT $650 $425
Interest 62 45
EBT $588 $380
Taxes (40%) 235 152
Net income $353 $228

Dividends paid $53 $48
Addition to retained earnings $300 $180

Shares outstanding 100 100
Price $25.00 $22.50
WACC 10.00%

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