The Davidson Corporation's balance sheet and income statement are provided below. Please answer the following questions:
a. Construct the statement of stockholders’ equity for December 31, 2016. No common stock was issued during 2016.
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?
PLEASE SHOW ALL OF YOUR WORK and FORMULAS FOR HOW YOU ARRIVED AT YOUR ANSWERS.
Balance Sheet as of December 31, 2016 (Millions of Dollars)
Assets
Liabilities and Equity
Cash and equivalents
$15
Accounts payable
$120
Accounts receivable
515
Accruals
280
Inventories
880
Notes payable
220
Total current assets
$1,410
Total current liabilities
$620
Net plant and equipment
2,590
Long-term bonds
1,520
Total liabilities
$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
Income Statement for Year Ending December 31, 2016 (Millions of Dollars)
Sales
$6,250
Operating costs excluding depreciation and amortization
5,230
EBITDA
$1,020
Depreciation and amortization
220
EBIT
$800
Interest
180
EBT
$620
Taxes (40%)
248
Net income
$372
Common dividends paid
$146
Earnings per share
$3.72
