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Review the fictitious company Balance Sheet in Chapter 2: Table 2.1 in the textbook and Income Statement in Chapter 2: Table 2.2 based on a
Review the fictitious company Balance Sheet in Chapter 2: Table 2.1 in the textbook and Income Statement in Chapter 2: Table 2.2 based on a fictitious company. What do you believe the significance of each of these is for financial management? Why did you answer the way you did?
TABLE 2.1 U.S. CORPORATION Balance Sheets as of December 31, 2001 and 2002 ($ in millions) 2001 2002 2001 2002 Assets Liabilities and Owners' Equity Current assets Current liabilities Cash $ 104 $ 160 Accounts payable $ 232 $ 266 Accounts receivable 455 688 Notes payable 196 123 Inventory 553 555 Total $ 428 $ 389 Total $1,112 $1,403 Fixed assets Net plant and Long-term debt $ 408 $ 454 equipment $1,644 $1,709 Owners' equity Common stock and paid-in surplus 600 640 Retained earnings 1,320 1,629 Total $1,920 $2,269 Total liabilities and Total assets $2,756 $3,112 owners' equity $2,756 $3,112 TABLE 2.2 U.S. CORPORATION 2002 Income Statement ($ in millions) Net sales Cost of goods sold Depreciation Earnings before interest and taxes Interest paid Taxable income Taxes Net income Dividends $103 Addition to retained earnings 309 $1,509 750 65 $ 694 70 $ 624 212 $ 412Step by Step Solution
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