.( Using the appropriate vocabulary in a correct manner is more important thanlong explanation.)

Sejong, Inc. has yearly operation cash flow (= EBIT+dep.-tax) = $1,000, interest = $100,

dividend = $300, and extraordinary profit = $0.

It's equities and debts are constant over time in book value.

It never retains free cash flow or earnings.

Yearly balance sheet and income statement are as follows.

Cash4,000Depreciation600

machines6,000EBIT500

Debts2,000Interests100

Equities8,000Ext. Ord. Profit0

EBT400

Tax100

Net income300

This year, Sejong, Inc. incurred extraordinary profit, and the operation cash flow became

(EBIT-dep.-ext. ord. profit-tax) = $500.

This extra ordinary profit won't occur from next year on.

As CFO of the firm, list all the financial policies that this extra ordinary profit

is susceptible to alter. And explain to shareholders why you have chosen those policies.