Question

# The Davidson Corporation’s balance sheet and income statement are provided here. $$\begin{matrix} \text{Assets} & \text{Liabilities and Equity}\\ \text{Cash and equivalents} & \text{\ 15} & \text{Accounts payable} & \text{\ 120}\\ \text{Accounts receivable} & \text{515} & \text{Accruals} & \text{280}\\ \text{Inventories} & \text{880} & \text{Notes payable} & \text{220}\\ \text{Total current assets} & \text{\ 1.410} & \text{Total current liabilities} & \text{\ 620}\\ \text{Net plant and equipment} & \text{2.590} & \text{Long-term bonds} & \text{1.520}\\ \text{ } & \text{ } & \text{Total liabilities} & \text{\ 2.140}\\ \text{ } & \text{ } & \text{Common stock (100 million shares)} & \text{260}\\ \text{ } & \text{ } & \text{Retained earnings} & \text{1.600}\\ \text{ } & \text{ } & \text{Common equity} & \text{\ 1.860}\\ \text{Total assets} & \text{\ 4.000} & \text{Total liabilities and equity} & \text{\ 4.000}\\ \end{matrix}$$ $$\begin{matrix} \text{Sales} & \text{\ 6.250}\\ \text{Operating costs excluding depreciation & amortization} & \text{5.230}\\ \text{EBITDA} & \text{\ 1.020}\\ \text{Depreciation and amortiaztion} & \text{220}\\ \text{EBIT} & \text{\ 800}\\ \text{Interest} & \text{180}\\ \text{EBT} & \text{\ 620}\\ \text{Taxes (40\\%)} & \text{248}\\ \text{Net income} & \text{\ 372}\\ \text{Common dividends paid} & \text{\ 146}\\ \text{Earning per share} & \text{\ 3.72}\\ \end{matrix}$$ 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?

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