Question

Question 1:

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%

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 Sheet

The 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?