J. Clark Inc. (JCI), a manufacturer and distributer of sports equipment, has grown until it has become a stable, mature company. Now JCI is planning its first distribution to shareholders. Shown below are the most recent year's financial statements and projections for the next year, 2020 (JCI has a fiscal year ending on June 30). JCI plans to liquidate 5500 million of its short-term securities and distribute them on July 1, 2020, the first day of the next fiscal year, but has not yet decided whether to distribute with dividends or with stock repurchases Inputs Amount of distribution Tax rate WACC Number of shares FCF constant growth rate $500 25% 11.0% 1,000 6.0% Income Statement (Millions of Dolla Net Sales Costs (except depreciation) Depreciation Earning before int. & tax Interest expense Earnings before taxes Taxes Net income Actual 06/30/2019 $19.490 $16,000 $1,300 $2,190 $150 $2,040 $510 $1,630 Proiected 06/30/2020 $20,658 $16.960 $1,378 $2,320 $152 $2.168 $542 $1,626 Assume first that JCI distributes the $500 million as dividends. Fill in the missing values in the balance sheet column for July 1, 2020, that is labeled "Distribute as Dividends." (Mint Be sure that the balance sheets balance after you fill in the missing items. Also, assume JCI did not have to establish an account for dividends payable prior to the distribution) See below calculations b. Now assume that JCI distributes the $500 million through stock repurchases. Fill in the missing values in the balance sheet column for July 1, 2020, that is labeled "Distribute as Repurchase." (Hint: Be sure that the balance sheets balance after you fill in the missing items) Repurchas as Dividend 7/1/2020 $170 7/2/2020 $170 Balance Sheets (Millions of Dollars) Assets Cash Short-term investments Accounts receivable Inventories Total current assets Net plant and equipment Total assets Liabilities & Equity Accounts payable Accruals Short-term debt Prior to Actual Distribution 6/30/2019 6/30/2020 $160 $170 $200 $640 $2,000 $2,120 $3,000 $3,180 $5,360 $6,110 $13,000 $13,780 $18,360 $19,890 $2,120 $3,180 $5,470 $13,780 $19,250 $2,120 $3,180 $5,470 $13,780 $19,250 $1,000 $2,000 $400 $1,060 $2,120 $124 $1,060 $2,120 $124 $1,060 $2,120 $124 $3,304 $2,070 $5,374 $5,850 $3,304 $2,070 $5,374 $5,850 Total current liabilities Long-term debt tal liabilities Common stock Treasury stock Retained earnings Total common equity Total liabilities & equity $3,400 $2,070 $5,470 $5,850 ($400) $7,440 $12,890 $18,360 $3,304 $2,070 $5,374 $5,850 ($400) $9,066 $14,516 $19,890 $5,850 $11,224 NOT BALANCED $5,850 $11,224 NOT BALANCED Check for balance: $0.0 $0.0 $8,026.0 $8,026.0 J. Clark Inc. (JCI), a manufacturer and distributer of sports equipment, has grown until it has become a stable, mature company. Now JCI is planning its first distribution to shareholders. Shown below are the most recent year's financial statements and projections for the next year, 2020 (JCI has a fiscal year ending on June 30). JCI plans to liquidate 5500 million of its short-term securities and distribute them on July 1, 2020, the first day of the next fiscal year, but has not yet decided whether to distribute with dividends or with stock repurchases Inputs Amount of distribution Tax rate WACC Number of shares FCF constant growth rate $500 25% 11.0% 1,000 6.0% Income Statement (Millions of Dolla Net Sales Costs (except depreciation) Depreciation Earning before int. & tax Interest expense Earnings before taxes Taxes Net income Actual 06/30/2019 $19.490 $16,000 $1,300 $2,190 $150 $2,040 $510 $1,630 Proiected 06/30/2020 $20,658 $16.960 $1,378 $2,320 $152 $2.168 $542 $1,626 Assume first that JCI distributes the $500 million as dividends. Fill in the missing values in the balance sheet column for July 1, 2020, that is labeled "Distribute as Dividends." (Mint Be sure that the balance sheets balance after you fill in the missing items. Also, assume JCI did not have to establish an account for dividends payable prior to the distribution) See below calculations b. Now assume that JCI distributes the $500 million through stock repurchases. Fill in the missing values in the balance sheet column for July 1, 2020, that is labeled "Distribute as Repurchase." (Hint: Be sure that the balance sheets balance after you fill in the missing items) Repurchas as Dividend 7/1/2020 $170 7/2/2020 $170 Balance Sheets (Millions of Dollars) Assets Cash Short-term investments Accounts receivable Inventories Total current assets Net plant and equipment Total assets Liabilities & Equity Accounts payable Accruals Short-term debt Prior to Actual Distribution 6/30/2019 6/30/2020 $160 $170 $200 $640 $2,000 $2,120 $3,000 $3,180 $5,360 $6,110 $13,000 $13,780 $18,360 $19,890 $2,120 $3,180 $5,470 $13,780 $19,250 $2,120 $3,180 $5,470 $13,780 $19,250 $1,000 $2,000 $400 $1,060 $2,120 $124 $1,060 $2,120 $124 $1,060 $2,120 $124 $3,304 $2,070 $5,374 $5,850 $3,304 $2,070 $5,374 $5,850 Total current liabilities Long-term debt tal liabilities Common stock Treasury stock Retained earnings Total common equity Total liabilities & equity $3,400 $2,070 $5,470 $5,850 ($400) $7,440 $12,890 $18,360 $3,304 $2,070 $5,374 $5,850 ($400) $9,066 $14,516 $19,890 $5,850 $11,224 NOT BALANCED $5,850 $11,224 NOT BALANCED Check for balance: $0.0 $0.0 $8,026.0 $8,026.0