Question

The Davidson Corporation's balance sheet and income statement are provided here. Davidson Corporation: Balance Sheet as...

The Davidson Corporation's balance sheet and income statement are provided here.

Davidson Corporation: Balance Sheet as of December 31, 2018
(Millions of Dollars)
Assets Liabilities and Equity
Cash and equivalents $ 20    Accounts payable $ 130
Accounts receivable 515    Accruals 320
Inventories 830    Notes payable 240
  Total current assets $ 1,365      Total current liabilities $ 690
Net plant and equipment 2,685    Long-term bonds 1,500
     Total liabilities $ 2,190
   Common stock (100 million shares) 260
   Retained earnings $ 1,600
     Common equity $ 1,860
Total assets $ 4,050    Total liabilities and equity $ 4,050


Davidson Corporation: Income Statement for Year Ending
December 31, 2018 (Millions of Dollars)
Sales $ 7,000
Operating costs excluding depreciation and amortization 4,410
EBITDA $ 2,590
Depreciation and amortization 350
EBIT $ 2,240
Interest 219
EBT $ 2,021
Taxes (40%) 808.4
Net income $ 1,212.6
Common dividends paid $ 388.032
Earnings per share $ 12.126
  1. Construct the statement of stockholders' equity for December 31, 2018. No common stock was issued during 2018. Write out all your answers completely. For example, 25 million should be entered as 25,000,000. Round your answers to the nearest share or dollar.
    Common Stock Retained Total Stockholders'
    Shares Amount Earnings Equity
    Balances, 12/31/17    $   $   $  
    2018 Net income   
    Cash dividends   
    Addition to RE   
    Balances, 12/31/18    $   $   $  

    Enter your answers for parts b-d in millions. For example, an answer of $25,000,000 should be entered as 25.

  2. How much money has been reinvested in the firm over the years? Round your answer to the nearest hundredth of million, if necessary.

    $   million
  3. At the present time, how large a check could be written without it bouncing? Round your answer to the nearest hundredth of million, if necessary.

    $   million
  4. How much money must be paid to current creditors within the next year? Round your answer to the nearest hundredth of million, if necessary.

    $   million
Business   Finance   
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Homework Answers

Answer #1

a.

Common stock Retained earnings Total stockholders equity
Balances, 12/31/17 (100000000 shares) $260000000 $775432000 $1035432000
2018 Net income $1212600000
Cash dividends ($388032000)
Addition to retained earnings $824568000
Balances, 12/31/18 $260000000 $1600000000 $1860000000

Beginning retained earnings = $1600000000 - ($1212600000) + $388032000

= $775432000

Addition to retained earnings = $1212600000 - $388032000

= $824568000.

b.

Answer : $1400 millions (Ending retained earnings balance)

c.

Answer : $20 millions ( Cash and equivalents)

d.

Answer : $690 millions (Total current liabilities)

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