Problems 1. Financial state Financial statements The Davidson Corporation's balance sheet and income statement are provided here: Davidson Corpori (Millions of Dollars) son Corporation Balance Sheet as of December 31, 2008 Assets Cash and equivalents Accounts receivable Inventories $ 100 500 800 1,400 1.600 Net plant and equipment urrent assets Liabilities and Equity Accounts payable Notes payable Accruals Total current liabilities Long-term bonds Total debt Common stock (100 million shares) Retained earnings Common equity Total liabilities and equity $ 100 200 300 600 700 1,300 300 Total assets 3,000 1.400 1.700 3,000 (Millions of Dollars) Ison Corporation: Income Statement for Year Ending December 31, 2008 $6,000 5,000 1,000 200 Sales Operating costs EBITDA Depreciation and amortization EBIT Interest EBT Taxes (50%) Net Income Common dividends paid Earnings per share 800 200 600 300 300 150 3.00 a. Construct the statement of stockholders equity for December 31, 2008. Retained earnings for December 31, 2007 equaled $1,250. b. How much money has been reinvested in the firm over the years? $100 c. At the present time, how large a check could be written without it bouncing? $1 million d. How much money must be paid to current creditors within the next year? a. Construct the statement of stockholders equity for December 31, 2008. Retained earnings for December 31, 2007 equaled $1,250. How much money has been reinvested in the firm over the years? $100 At the present time, how large a check could be written without it bouncing? $1 million Iow much money must be paid to current creditors within the next year? 2. Balance sheet Circle the following action that will always increase cash a shown on a firm's balance sheet @ It issues $2 million of new common stock. 5. It buys new plant and equipment at a cost of $3 million. c. It reports a large loss for the year. d. It increases the dividends paid on its common stock