The focus on traditional financial statements is accounting data rather than cash flow. However, cash flow is important to investors, managers, and stock analysts. Therefore, corporate decision makers and security analysts need to modify accounting data provided to them. An important modification is the concept of free cash flow (FCF). Many analysts regard FCF as being the single and most important number that can be developed from the accounting statements, even more important than net income. The equation for free cash flow is: FCF = (EBIT(1 - T) + Depreciation and amortization) - Capital expenditures + ANet operating working capital] Free cash flow is the cash flow actually available for payments to all investors (stockholders and debtholders) after the company has made investments in fixed assets, new products, and operating working capital . A negative FCF means that the company does not have sufficient internal funds to finance its investments in fixed assets and working capital, and that it will have to raise new money in the capital markets to pay for these investments. Negative FCF is not always bad. If FCF is negative because after- tax operating income is negative this is bad, because the company is probably experiencing operating problems. Exceptions to this might be startup companies, companies incurring significant expenses to launch a new product line, and high-growth companies-with large capital investments. Quantitative Problem: Rosnan Industries' 2018 and 2017 balance sheets and income statements are shown below. Balance Sheets Assets 2018 2017 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 Accruals 75 Notes payable 150 Total current liabilities $375 Long-term debt 450 Total liabilities 825 Common stock Retained earnings Common equity Total liabilities and equity 1.2251 ,225 1,000 400 2,2251.625 1,625 $3,050 $2,125 Income Statements 2018 $3,100 1,250 2017 $1,600 1,000 Sales Operating costs excluding depreciation and amortization EBITDA Depreciation and amortization EBIT Interest EBT Taxes (40%) Net income $600 75 $525 $1,850 100 $1,750 62 $1,688 675 $1,013 $480 192 $288 Dividends paid Addition to retained earnings $53 $600 $48 $240 Shares outstanding Price WACC 100 $25.00 10.00% 100 $22.50 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 above, what is Rosnan's 2018 free cash flow (FCF)? Use a minus sign to indicate a negative FCF. Round your answer to the nearest dollar. $ -512