Rhodes Corporation: Income Statements for Year Ending December 31 (Millions of Dollars) 2018 2017 Sales $11,000 $10,000 Operating costs excluding depreciation 9,360 8,500 Depreciation and amortization 380 360 Earnings before interest and taxes $ 1,260 $ 1,140 Less interest 120 100 $ 1,140 $ 1,040 Pre-tax income Taxes (40%) 456 416 Net income available to common stockholders $ 684 $ 624 Common dividends $ 220 200 Rhodes Corporation: Balance Sheets as of December 31 (Millions of Dollars) 2018 2017 Assets Cash $ 550 $ 500 Short-term investments 110 100 Accounts receivable 2,750 2,500 Inventories 1,650 1,500 Total current assets $5,060 $4,600 Net plant and equipment 3,850 3,500 Total assets $8,910 $8,100 Liabilities and Equity Accounts payable $1,100 $1,000 Accruals 550 500 Notes payable 384 200 Total current liabilities $2,034 $1,700 Long-term debt 1,100 1,000 Total liabilities $3,134 $2,700 Common stock 4,312 4,400 Retained earnings 1,464 1,000 Total common equity $5,776 $5,400 Total liabilities and equity $8,910 $8,100

Rhodes Corporation: Income Statements for Year Ending December 31 (Millions of Dollars) 2018 2017 Sales $11,000 $10,000 Operating costs excluding depreciation 9,360 8,500 Depreciation and amortization 380 360 Earnings before interest and taxes $ 1,260 $ 1,140 Less interest 120 100 $ 1,140 $ 1,040 Pre-tax income Taxes (40%) 456 416 Net income available to common stockholders $ 684 $ 624 Common dividends $ 220 200 Rhodes Corporation: Balance Sheets as of December 31 (Millions of Dollars) 2018 2017 Assets Cash $ 550 $ 500 Short-term investments 110 100 Accounts receivable 2,750 2,500 Inventories 1,650 1,500 Total current assets $5,060 $4,600 Net plant and equipment 3,850 3,500 Total assets $8,910 $8,100 Liabilities and Equity Accounts payable $1,100 $1,000 Accruals 550 500 Notes payable 384 200 Total current liabilities $2,034 $1,700 Long-term debt 1,100 1,000 Total liabilities $3,134 $2,700 Common stock 4,312 4,400 Retained earnings 1,464 1,000 Total common equity $5,776 $5,400 Total liabilities and equity $8,910 $8,100

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 11MCQ

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