FINANCIAL STATEMENTS The Davidson Corporation’s balance sheet and income statement are provided here.

 

Davidson Corporation: Balance Sheet as of December 31, 2008

(Millions of Dollars)

Assets

 

Liabilities and Equity

Cash and equivalents

$ 15

Accounts payable

$ 120

Accounts receivable

515

Notes payable

220

Inventories

880

Accruals

280

Total current assets

$1,410

Total current liabilities

$ 620

Net plant and equipment

2,590

Long term bonds

1,520

   

Total debt

$ 2,140

   

Common stock (100 million shares)

260

   

Retained earnings

1,600

   

Common equity

$ 1,860

Total assets

$4,000

Total liabilities and equity

$ 4,000

 

Davidson Corporation: Income Statement for Year Ending December 31, 2008 (Millions of Dollars)

 

Sales

$6,250

Operating costs excluding depreciation and amortization

5,230

EBITDA

$1,020

Depreciation & amortization

220

EBIT

$800

Interest

180

EBT

$620

Taxes (40%)

248

Net income

$372

Common dividends paid

$146

Earnings per share

$3.72

a. Construct the statement of stockholders’ equity for December 31, 2008.

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?