If Decker had a financing deficit, it could remedy the situation by a. buying back common stock b. borrowing on its line of credit c. paying a special dividend d. borrowing from retained earnings e. paying down its long-term debt
If Decker had a financing deficit, it could remedy the situation by a. buying back common stock b. borrowing on its line of credit c. paying a special dividend d. borrowing from retained earnings e. paying down its long-term debt
Corporate Financial Accounting
14th Edition
ISBN:9781305653535
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Carl Warren, James M. Reeve, Jonathan Duchac
Chapter14: Financial Statement Analysis
Section: Chapter Questions
Problem 14.1EX: Vertical analysis of income statement Revenue and expense data for Innovation Quarter Inc. for two...
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Question 31
Decker Enterprises | ||||||
Below are the simplified current and projected financial statements for Decker Enterprises. All of Decker's assets are operating assets. All of Decker's current liabilities are operating liabilities. | ||||||
Income statement |
Current |
Projected | ||||
Sales |
na |
1,500 |
||||
Costs |
na |
1,080 |
||||
Profit before tax |
na |
420 |
||||
Taxes (25%) |
na |
105 |
||||
Net income |
na |
315 |
||||
Dividends |
na |
95 |
||||
Balance sheets | Current | Projected | Current | Projected | ||
Current assets |
100 |
115 |
Current liabilities |
70 |
81 |
|
Net fixed assets |
1,200 |
1,440 |
Long-term debt |
300 |
360 |
|
Common stock |
500 |
500 |
||||
430 |
650 |
If Decker had a financing deficit, it could remedy the situation by
a. |
buying back common stock
|
|
b. |
borrowing on its line of credit
|
|
c. |
paying a special dividend
|
|
d. |
borrowing from retained earnings
|
|
e. |
paying down its long-term debt
|
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