This is an action in trespass brought in the Court of Common Pleas of Allegheny County, 282 Pa.Super. 142, 422 A.2d 868 in which appellant seeks to recover damages sustained from an injury suffered during the course of his employment. On March 29, 1972 the left hand of David John Nath, appellant, became caught in the gears and blades of a wire and cable stripping machine which did not provide a guard to protect the user's hands. Mr. Nath lost three fingers and part of the hand. His employer, Keystone Metals Company (now Keystone Resources) obtained the machine from the Rigby Manufacturing Company, which made it. Keystone asked appellee, National Equipment Leasing Corporation (National) to finance the purchase. Keystone had ordered the machine, bargained for the purchase price and received the initial invoice of $1,875.00.

1. Is the net income of a year the money the company made that particular year or is it a

number whose significance is quite doubtful?

2. Is depreciation the loss of value of fixed assets?

3. The so-called "cash flow" (net income plus depreciation) is a flow of cash, but is it a

flow to the shareholders or to the company?

4. The dividend is the part of the net income that the company distributes to

shareholders. As the dividend represents real money, the net income is also real

money. Is that true?

5. The part of the net income that is not distributed to shareholders goes to reserves

(shareholders' equity). As dividends represent real money, reserves are also real

money. Is that true?

6. Does the shareholders' equity represent the savings a company has accumulated

through the years?

7. Is book value the best proxy to the value of the shares?

8. Is a valuation realized by a prestigious investment bank a scientifically approved

result which any investor could use as a reference?

9. Is it possible for a company with a positive net income and which does not distribute

dividends to find itself in suspension of payments?

2 - IESE Business School-University of Navarra

10. There are four ways a company can use the money it generates: a) buying other

companies or assets; b) reducing its debt; c) distribute it to shareholders, and d)

increasing its cash holdings. What other reasonable things can it do?