Laiho Industries’ 2007 and 2008 balance sheets (in thousands of dollars) are shown.

a. Sales for 2008 were $455,150,000, and EBITDA was 15% of sales. Furthermore, depreciation and amortization were 11% of net fixed assets, interest was $8,575,000, the corporate tax rate was 40%, and Laiho pays 40% of its net income in dividends. Given this information, construct the firm’s 2008 income statement.

b. Construct the statement of stockholders’ equity for the year ending December 31, 2008, and the 2008 statement of cash flows.

c. Calculate 2007 and 2008 net working capital and 2008 free cash flow.

d. If Laiho increased its dividend payout ratio, what effect would this have on corporate taxes paid? What effect would this have on taxes paid by the company’s shareholders?

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2008 2007 $ 89,725 85,527 34,982 $210,234 Cash $102,850 103,365 Accounts receivable Inventories 38,444 $244,659 67,165 $311,824 Total current assets Net fixed assets 42,436 $252,670 $ 23,109 22,656 14,217 $ 59,982 63,914 $123,896 90,000 Total assets $ 30,761 30,477 Accounts payable Accruals Notes payable 16,717 $ 77,955 76,264 $154,219 100,000 Total current liabilities Long-term debt Total liabilities Common stock Retained earnings Total common equity Total liabilities and equity 57,605 $157,605 $311,824 38,774 $128,774 $252,670