Chapter 3, Problem 16P

### Fundamentals of Financial Manageme...

15th Edition
Eugene F. Brigham + 1 other
ISBN: 9781337395250

Chapter
Section

### Fundamentals of Financial Manageme...

15th Edition
Eugene F. Brigham + 1 other
ISBN: 9781337395250
Textbook Problem

# FINANCIAL STATEMENTS The Davidson Corporation's balance sheet and income statement are provided here.Davidson Corporation: Income Statement for Year Ending December 31, 2018 (Millions of Dollars) Sales $6250 Operating costs excluding depreciation and amortization 5,230 EBITDA$ 1020 Depreciation and amortization 220 EBIT $800 Interest 180 EOT$ 620 Taxes (40%) 248 Net income $372 Common dividends paid$ 146 Earnings per share $372 a. Construct the statement of stockholder’s equity for December 31, 2018. No common stock was issued during 2018. b. How much money has been reinvested in the firm over the years? c. At the present time, how large a check could be written without it bouncing? d. How much money must be paid to current creditors within the next year? a. Summary Introduction To compute: The statement of stockholders’ equity of Company A for 2018. Statement of Stockholders’ Equity: The statement of stockholders’ equity shows the opening and closing balance of stockholder’s equity with the changes occurred during the accounting period. Explanation The calculation of statement of the stockholdersā equity is as follows: Note: The calculation of retained earnings for December 31, 2018 is as follows: RetainingĀ earningsĀ atĀ theĀ end=(BeginningĀ retainedĀ earnings+NetĀ IncomeāDividendĀ paid)$1,600,000,000=(BeginningĀ Ā retainedĀ earnings+

b.

Summary Introduction

To determine: The amount that has been reinvested in the firm.

Statement of Stockholders’ Equity:

The statement of stockholders’ equity shows the opening and closing balance of stockholder’s equity with the changes occurred during the accounting period.

c.

Summary Introduction

To determine: The amount in the check that would be written without bouncing currently.

Statement of Stockholders’ Equity:

The statement of stockholders’ equity shows the opening and closing balance of stockholder’s equity with the changes occurred during the accounting period.

d.

Summary Introduction

To determine: The amount that should be paid to the present creditors within the upcoming year.

Statement of Stockholders’ Equity:

The statement of stockholders’ equity shows the opening and closing balance of stockholder’s equity with the changes occurred during the accounting period.

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