Begin with the partial model in the file Ch02 P20 Build a Model.xlsx on the textbook?s Web site.

a. Britton String Corp. manufactures specialty strings for musical instruments and tennis racquets. Its most recent sales were $880 million; operating costs (excluding depreciation) were equal to 85% of sales; net fixed assets were $300 million; depreciation amounted to 10% of net fixed assets; interest expenses were $22 million; the state-plus-federal corporate tax rate was 25%; and it paid 40% of its net income out in dividends. Given this information, construct Britton String?s income statement. Also calculate total dividends and the addition to retained earnings. Report all dollar figures in millions.

b. Britton String?s partial balance sheets follow. Britton issued $36 million of new common stock in the most recent year. 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.

c. Construct the statement of cash flows for 2020.

Britton Strings Corp: Balance Sheets as of December 31 (Millions of Dollars) 2020 2019 Assets $ 70 $ 60 Cash and cash equivalents Short-term investments 46 42 Accounts receivable 120 140 $264 $500 $196 $438 Inventories Total current assets Net fixed assets 300 262 $800 Total assets $700 Liabilities and Equity Accounts payable Accruals $ 73 $ 64 49 60 Notes payable Total current liabilities Long-term debt Total liabilities 39 $ 152 $ 163 217 178 $ 369 $ 341 $249 Common stock Retained earnings Total common equity Total liabilities and equity 285 146 110 $431 $800 $359 $700