FINANCIAL STATEMENT ANALYSIS. For this and the next 3 questions. Consider the income

statement below. Calculate retained earnings.

Sales 500,000

COGS 325,000

Gross profit 175,000

Depreciation 4,000

Other expenses 31,000

Total operating expenses 35,000

EBIT 140,000

Interest charges 7,000

EBT 133,000

Taxes (40%) 53,200

Net income 79,800

Dividend payout ratio 25%

Stock price: P0 $12

Shares outstanding: n 10,000

a. $19,950

b. $39,900

c. $59,850

d. $83,800

e. None of the above

b. Calculate earnings per share.

a. $19.52

b. $7.98

c. $7.79

d. $8.17

e. None of the above

c. Suppose depreciation INCREASES by 80%. Calculate net cash flow and earnings per share.

a. $59,850; $8.17

b. $83,800; $7.98

c. $85,080; $7.79

d. $82,520; $8.17

e. None of the above

VBM. A firms operating assets typically include [I] marketable securities, [II] equity investments held in other firms, [III] real estate property owned by the firm but leased out to another business entity [IV] inventories [V] investments in property, plant and equipment used in the firms business. a. I, II, III b. IV, V c. II, III, IV, V d. I, II, V e. Only V f. All are correct