Problem 3.16 – Davidson Corporation

Fundamentals of Financial Management, Concise

Brigham and Houston

09th Edition, 10th Edition, and 11th Edition

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Difficulty – Hard

You are provided with an income statement and a balance sheet for Davidson Corporation and are asked to determine the following items:

a. Construct the statement of stockholders’ equity.
b. Determine the amount that has been reinvested in the firm.
c. Compute how large a check could be written without it bouncing.
d. Calculate the amount to be paid to creditors within the next year.

Note: if you're on a phone, you will need to tilt your phone sideways for this problem because the solution is fairly wide.

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