4. The Davidson Corporation\'s balance sheet and income statement are given here

Question

4. The Davidson Corporation's balance sheet and income statement are given here: Davidson Corporation: Balance Sheet as of December 31, 2005 (Millions of Dollars) Assets Liabilitios and Equity s 120 Cash and equivalents Accounts receivable inventories s 15 515 Notes payable $1,410 2,590 Long-torm bonds S 620 1,520 $2,140 Total current liabilities Total dobt (100 million sharos) Common equity Total current assets Net plant and equipment -Common stock Rotained earnings 1,600 Total assets $4,000 Total liabilities and equity $4,000 Davidson Corporation: Income Statement for Year Ending December 31, 2005 (Millions of Dollars) Sales Operating costs excluding doprociation and amortization EBITDA Doprociation and amortization EBIT $6,250 5,230 $1,020 EBT Taxes (40%) Not income Common dividends paicd Earnings per share S 800 180 $ 620 248 372 . 1 $ 3.72

Explanation / Answer

b. Reinvested amount = $1,600 million

c. Cash + Cash Equivalent = $15 million

d. Amount paid to current creditors = $620 million

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Retained Earnings Statement Beginning balance at 12/31/2004 $1,374 Add : Net Income $372 Less : Cash Dividends ($146) Retained earnings at 12/31/2005 $1,600

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