Table 2.1 presents Bartlett Company's income statements for the years ended December 31, 2003, and 2002.

TABLE 2.2 Bartlett Company Balance Sheets ($000) December 31 Assets 2003 2002 Current assets Cash $ 363 $ 288 Marketable securities 68 51 Accounts receivable 503 365 Inventories 289 300 Total current assets $1,223 $1,004 Gross fixed assets (at cost)- Land and buildings $2,072 $1,903 Machinery and equipment 1,866 1,693 Furniture and fixtures 358 316 Vehicles 275 314 Other (includes financial leases) 98 96 Total gross fixed assets (at cost) $4,669 $4,322 Less: Accumulated depreciation 2,295 2,056 Net fixed assets $2,374 $2,266 Total assets $3,597 $3,270 Liabilities and Stockholders' Equity Current liabilities Accounts payable $ 382 $ 270 Notes payable 79 99 Accruals 159 114 Total current liabilities $ 620 $ 483 Long-term debt (includes financial leases) $1,023 $ 967 Total liabilities $1,643 $1,450 Stockholders' equity Preferred stock-cumulative 5%, $100 par, 2,000 shares authorized and issued $ 200 $ 200 Common stock-$2.50 par, 100,000 shares authorized, shares issued and outstanding in 2003: 76,262; in 2002: 76,244 191 190 Paid-in capital in excess of par on common stock 428 418 Retained earnings 1,135 1,012 Total stockholders' equity $1,954 $1.820 Total liabilities and stockholders' equity $3,597 $3,270 "In 2003, the firm has a 6-year financial lease requiring annual beginning-of-year payments of $35,000. Four years of the lease have yet to run. "Annual principal repayments on a portion of the firm's total outstanding debt amount to $71,000. The annual preferred stock dividend would be $5 per share (5% * $100 par), or a total of $10,000 annually ($5 per share * 2,000 shares).TABLE 2.3 Bartlett Company Statement of Retained Earnings ($000) for the Year Ended December 31, 2003 Retained earnings balance (January 1, 2003) $1,012 Plus: Net profits after taxes (for 2003) 231 Less: Cash dividends (paid during 2003) Preferred stock ($10) Common stock 98 Total dividends paid 108 Retained earnings balance (December 31, 2003) $1,135TABLE 2.4 Bartlett Company Statement of Cash Flows ($000) for the Year Ended December 31, 2003 Cash Flow from Operating Activities Net profits after taxes $231 Depreciation 239 Increase in accounts receivable ( 138) Decrease in inventories 11 Increase in accounts payable 112 Increase in accruals 45 Cash provided by operating activities $500 Cash Flow from Investment Activities Increase in gross fixed assets ($347) Change in business interests O Cash provided by investment activities ( 347) Cash Flow from Financing Activities Decrease in notes payable ($ 20) Increase in long-term debts 56 Changes in stockholders equityb 11 Dividends paid ( 108) Cash provided by financing activities ( 61) Net increase in cash and marketable securities $ 92 "As is customary, parentheses are used to denote a negative number, which in this case is a cash outflow. "Retained earnings are excluded here, because their change is actually reflected in the combination of the "net profits after taxes" and "dividends paid" entries.TABLE 2.1 Bartlett Company Income Statements ($000) For the years ended December 31 2003 2002 Sales revenue $3,074 $2,567 Less: Cost of goods sold 2,088 1,711 Gross profits $ 986 $ 856 Less: Operating expenses Selling expense $ 100 $ 108 General and administrative expenses 194 187 Lease expensed 35 35 Depreciation expense 239 223 Total operating expense $ 568 $ 553 Operating profits $ 418 $ 303 Less: Interest expense 93 91 Net profits before taxes $ 325 $ 212 Less: Taxes (rate = 29%) 94 64 Net profits after taxes $ 231 $ 148 Less: Preferred stock dividends 10 10 Earnings available for common stockholders $ 221 $ 138 Earnings per share (EPS) $ 2.90 $ 1.81 Dividend per share (DPS) $ 1.29 $ 0.75 "Lease expense is shown here as a separate item rather than being included as part of interest expense, as specified by the FASB for financial-reporting pur- poses. The approach used here is consistent with tax-reporting rather than financial-reporting procedures. "The 29% tax rate for 2003 results because the firm has certain special tax write-offs that do not show up directly on its income statement. "Calculated by dividing the earnings available for common stockholders by the number of shares of common stock outstanding-76,262 in 2003 and 76,244 in 2002. Earnings per share in 2003: $221,000 : 76,262 =$2.90; in 2002: $138,000 + 76,244 = $1.81. "Calculated by dividing the dollar amount of dividends paid to common stock- holders by the number of shares of common stock outstanding. Dividends per share in 2003: $98,000 = 76,262 =$1.29; in 2002: $57,183 = 76,244=$0.75