Give working notes
Below are Glasgow Co.'s financial statements for 2015 Statement of Retained Earnings for 2015 ($ millions) Retained earnings brought forward al January 1, 2015 Net income for 2015 $250 500 $750 250 Dividend paid Retained earnings at December 31, 2015 $500 Glasgow Co. 2015 Balance Sheet ($ millions) Current assets Cash $ 50 Accounts receivable 750 Inventory Total current assets $1,000 Long-term assets Cost $1,500 Accumulated depreciation (500) 1,000 Total assets $2,000 200 $ 200 100 $ 300 500 Current liabilities Trade creditors Short-term bank loans Total current liabilities Long-term liabilities Total liabilities Common shares (1 million) Retained earnings Total shareholders' equity Total liabilities & shareholders' equity S 800 $ 700 500 1,200 $2,000 (d) What is the maximum dividend that Glasgow Co. could have paid in 2015 without recourse to additional borrowing? (e) If Glasgow Co. wanted to invest $100 million in a plot of agricultural land, how could it finance the investment? (f) If Glasgow Co. wanted to invest $800 million in a plot of agricultural land, how could the company finance it? (g)As a bank lending officer, would you lend Glasgow Co. $10 million to buy an office building? (h) As a bank lending officer, would you lend Glasgow Co. $500) million to invest in a new product that the company had developed and wanted to put on the market? If yes, under what conditions? Below are Glasgow Co.'s financial statements for 2015 Statement of Retained Earnings for 2015 ($ millions) Retained earnings brought forward al January 1, 2015 Net income for 2015 $250 500 $750 250 Dividend paid Retained earnings at December 31, 2015 $500 Glasgow Co. 2015 Balance Sheet ($ millions) Current assets Cash $ 50 Accounts receivable 750 Inventory Total current assets $1,000 Long-term assets Cost $1,500 Accumulated depreciation (500) 1,000 Total assets $2,000 200 $ 200 100 $ 300 500 Current liabilities Trade creditors Short-term bank loans Total current liabilities Long-term liabilities Total liabilities Common shares (1 million) Retained earnings Total shareholders' equity Total liabilities & shareholders' equity S 800 $ 700 500 1,200 $2,000 (d) What is the maximum dividend that Glasgow Co. could have paid in 2015 without recourse to additional borrowing? (e) If Glasgow Co. wanted to invest $100 million in a plot of agricultural land, how could it finance the investment? (f) If Glasgow Co. wanted to invest $800 million in a plot of agricultural land, how could the company finance it? (g)As a bank lending officer, would you lend Glasgow Co. $10 million to buy an office building? (h) As a bank lending officer, would you lend Glasgow Co. $500) million to invest in a new product that the company had developed and wanted to put on the market? If yes, under what conditions
