Problem: A.E. Neuman Corporation Statement of Cash Flows for Year Ended December 31, 2010
Given the financial information for the A.E. Neumann Corporation please provide answer the following problems.
A: Make a Statement of Cash Flows for year ended December 31, 2010.
B: What is dividend payout ratio for 2010?
C: If we raised the dividend payout ratio to 100%, what would occur to retained earnings at year end 2010?
Assets 2009 2010
Cash 45,000 50,000
Marketable Securities 175,000 160,000
Accounts Receivable 140,000 110,000
Inventories 230,000 350,000
Investments 170,000 55,000
Plant & Equipment 1,500,000 1,750,000
Less Accum Deprec -450,000 -600,000
Net Plant & Equipment 850,000 950,000
Total Assets 1,810,000 1,900,000
Liabilities & Stockholders’ Equity 2009 2010
Accounts Payable 110,000 85,000
Notes Payable 150,000 140,000
Accrued Expense 80,000 35,000
Income Tax Payable 10,000 15,000
Bonds Payable 860,000 955,000
Common Stock (100,000 shares $1 par) 100,000 100,000
Capital Pain in Excess Par 100,000 100,000
Retained Earnings 400,000 470,000
Total Liabilities & Stockholders’ Equity 1,810,000 1,900,000
Sales 7,000,000
Less Cost of Goods Sold 4,200,000
Gross Profit 2,800,000
Less Selling & Administrative Expense 260,000
Operating Profit 2,540,000
Less depreciation Expense 150,000
Earnings before Interest & Taxes 2,390,000
Less Interest Expense 160,000
Earnings before Taxes 2,230,000
Less Taxes (50%) 1,150,000
Net Income 1,150,000
Dividends Paid 1,045,000