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Fundamentals of Financial Manageme...

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

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BuyFindarrow_forward

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.

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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
  1. a. Construct the statement of stockholder’s equity for December 31, 2018. No common stock was issued during 2018.
  2. b. How much money has been reinvested in the firm over the years?
  3. c. At the present time, how large a check could be written without it bouncing?
  4. 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 stockholders’ equity is as follows:

Note:

The calculation of retained earnings for December 31, 2018 is as follows:

Retaining earnings at the end=(Beginning retained earnings+Net IncomeDividend paid)$1,600,000,000=(Beginning  retained 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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