Chapter 2. 2-14 Solution

Chapter 2. 2-14 a. Cumberland Industries closely recent sales were $455,000,000; operating costs (excluding depreciation) were relate to 85% of sales; net fixed assets were $67,000,000; depreciation amounted to 10% of net fixed assets; interest costs were $8,550,000; the state-plus-federal corpo prise revalue rate was 40% and Cumberland paid 25% of its net income reveal in dividends. Given this nurture, construct Cumberlands income statement. Also calculate come dividends and the add-on to retained hire. The input information required for the occupation is sketch in the bring up remark Data sectionalization below. exploitation this data and the relaxation sheet above, we constructed the income statement shown below. Key Input Data for Cumberland Industries2010 (Thousands of dollars) Sales Revenue$455 000 Expenses (excluding depreciation) as a pct of sales85,0% earn fixed assest$67 000 Depr.

as a % of net fixed assets10,0% Tax rate40,0% have-to doe with expense$8 550 Dividend Payout Ratio25 % Cumberland Industries: Income Statement (Thousands of dollars)2010 Sales$455 000 direct costs excluding depreciation$386 750 EBITDA$68 250 Depreciation (Cumberland has no amortisation charges)$6 700 EBIT$61 550 Interest expense$8 550 EBT$53 000 Taxes (40%)$21 200 Net income$31 800 Common dividends$7 950 Addition to retained earnings$23 850 b. Cumberland Industries partial balance sheets are shown below. Cumberland issued $10,000,000 of new general stock in the most recent year. Using this information and the results from par t a, fill in the missing values for communa! l stock, retained earnings, total common equity, and total liabilities and equity. Dollar value of common stock issued (in thousands of dollars)$10 000 Cumberland Industries December 31 equilibrise Sheets (in thousands...If you want to get a full essay, order it on our website: BestEssayCheap.com

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