a) Prepare a statement of cash flows for the Crosby Corporation b) If the market value of a share of common stock is 3.3 times book value for 20X1, what is the firms P/E ratio for 20X2? _______________________________________________________________________ CROSBY CORPORATION Income Statement For the Year Ended December 31, 20X2 Sales $2,200,000 Cost of goods sold 1,300,000 Gross profits 900,000 Selling and administrative expense 420,000 Depreciation expense 150,000 Operating income 330,000 Interest expense 90,000 Earnings before taxes 240,000 Taxes 80,000 Earnings after taxes 160,000 Preferred stock dividends 10,000 Earnings available to common stockholders $ 150,000 Shares outstanding 120,000 Earnings per share $ 1.25 Statement of Retained Earnings For the Year Ended December 31, 20X2 Retained earnings, balance, January 1, 20X2 $500,000 Add: Earnings available to common stockholders, 20X2 150,000 Deduct: Cash dividends declared and paid in 20X2 50,000 Retained earnings, balance, December 31, 20X2 $600,000 Comparative Balance Sheets For 20X1 and 20X2 Year-End Year-End Assets 20X1 20X2 Current assets: Cash $ 70,000 $100,000 Accounts receivable (net) 300,000 350,000 Inventory 410,000 430,000 Prepaid expenses 50,000 30,000 Total current assets 830,000 910,000 Investments (long-term securities) 80,000 70,000 Plant and equipment 2,000,000 2,400,000 Less: Accumulated depreciation 1,000,000 1,150,000 Net plant and equipment 1,000,000 1,250,000 Total assets $1,910,000 $2,230,000 Liabilities and Stockholders Equity Current liabilities: Accounts payable $ 250,000 $ 440,000 Notes payable 400,000 400,000 Accrued expenses 70,000 50,000 Total current liabilities 720,000 890,000 Long-term liabilities: Bonds payable, 20X2 70,000 120,000 Total liabilities 790,000 1,010,000 Stockholders equity: Preferred stock, $100 par value 90,000 90,000 Common stock, $1 par value 120,000 120,000 Capital paid in excess of par 410,000 410,000 Retained earnings 500,000 600,000 Total stockholders equity 1,120,000 1,220,000 Total liabilities and stockholders equity $1,910,000 $2,230,000 _______________________________________________________________________