Question #4: 880 The ABC Corporation's balance sheet and income statement are provided here: Davidson Corporation: Balance Sheet as of December 31, 2008 (Millions of Dollars) Assets Liabilities and Equity Cash and equivalents $ 15 Accounts payable Accounts receivable 515 Notes payable Inventories Accruals Total current assets $1,410 Total current liabilities Net plant and equipment 2,590 Long-term bonds Total debt Common stock (100 million shares) Retained earnings Common equity Total assets $4,000 Total liabilities and equity Davidson Corporation: Income Statement For Year Ending December 31, 2008 (Millions of dollars) Sales Operating costs excluding depreciation and amortization EBITDA Depreciation & amortization EBIT Interest EBT Taxes (40%) Net income $ 120 220 280 $ 620 1,520 $ 2,140 260 1,600 $ 1860 $ 4,000 $6,250 5,230 $1,020 220 $ 800 180 $ 620 248 $ 322 Common dividends paid Earnings per share $ 146 $ 3.72 b. How much money has been reinvested in the firm over the years? At the present time, how large a check could be written without it bouncing? d. How much money must be paid to current creditors within the next year? C

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