a. The 2015 sales of Cumberland Industries were $455,000,000; operating costs (excluding depreciation) were equal to 85%

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a. The 2015 sales of Cumberland Industries were $455,000,000; operating costs (excluding depreciation) were equal to 85% of sales; net fixed assets were $67,000,000; depreciation amounted to 10% of net fixed assets; interest expenses were $8,550,000; the state-plus-federal corporate tax rate was 40%; and Cumberland paid 25% of its net income out in dividends. Given this information, construct Cumberland's 2015 income statement. Also calculate total dividends and the addition to retained earnings.

b. The partial balance sheets of Cumberland Industries are shown below. Cumberland issued $10,000,000 of new common stock in 2015. Using this information and the results from part a, fill in the missing values for common stock, retained earnings, total common equity, and total liabilities and equity.


A. The 2015 sales of Cumberland Industries were $455,000,000; operating

c. Construct the statement of cash flows for 2015.

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Intermediate Financial Management

ISBN: 978-1285850030

12th edition

Authors: Eugene F. Brigham, Phillip R. Daves

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