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on its balance sheet, could its If a "typical" firm reports $20 million of retained earnings directors declare a $20 million cash dividend without having any qualms about what they were doing? Explain your answer. 3-3 Explain the following statement: Although the balance sheet can be thought of as a snap- 3-4 4atomant ronorts on. h. What is the expranlation orue unies INCOME STATEMENT Little Books Inc. recently reported $3 million of net income. Its EBIT was $6 million, and its tax rate was 40% . What was its interest expense? [Hint: Write out the headings for an income statement, and fill in the known values. Then divide $3 million of net income by (1- T) 0.6 to find the pretax income. The difference between EBIT and taxable income must be interest expense. Use this same problems.] -3-2 procedure to complete similar