Question

Royal Corp’s financial information (in millions, except for Dividends) for Problems 2 and 3:

                                                         2019                2018
Accounts Payable                                            $ 7,000           $ 6,780

Accounts Receivable                                           5,000               4,685

Additional Paid-in Capital                                  4,000               4,000

Cash                                                                    8,577               5,654

Common Stock                                                   3,107               3,107          

Cost of Goods Sold                                        48,464           47,594

Depreciation                                                        1,315               1,244          

Dividends per share                                              1.53                 1.28

Goodwill                                                         18,051           19,121

Interest Expense                                                  1,200               1,100

Inventory                                                            8,871               8,101

Long-Term Debt                                                   ?                      ?

Net Property, Plant & Equipment                   26,500           25,311

Notes Payable                                                     4,200               3,770

Research & Development Expense                    1,847               1,747

Retained Earnings                                                   ?             23,045          

Revenue                                                          61,200           59,000

Selling General & Admin Expense                    3,200               3,024

Shares Outstanding                                            1,170              1,280

Treasury Stock                                                   (6,500)          (4,200)

   

Tax Rate = 30%

Note that a reduction in Goodwill would be similar to Depreciation Expense in a firm’s Operating Cash Flow.

A. Construct Income Statements for 2018 and 2019
B. Construct Balance Sheets for 2018 and 2019

C. Construct a 2019 Statement of Cash Flows (Goodwill reduction is a noncash expense)

Answer 1

Income Statement
For the period 2019 and 2018
	2019 ($)	2018 ($)
revenue	61200	59000
cost of goods sold	48464	47594
gross profit	12736	11406
expenses
Selling General & Admin Expense	3200	3024
Research & Development Expense	1847	1747
Depreciation	1315	1244
operating income	6374	5391
interest expense	1200	1100
earnings before tax	5174	4291
tax	1552	1287
net income	3622	3004
Balance Sheet
As of Dec.31, 2019 and 2018
assets	2019 ($)	2018 ($)
Cash	8577	5654
Accounts Receivable	5000	4685
Inventory	8871	8101
Net Property, Plant & Equipment	26500	25311
Goodwill	18051	19121
total assets	66999	62872
liabilities and stockholders equity
Notes Payable	4200	3770
Accounts Payable	7000	6780
total current liabilities	11200	10550
non-current liabilities
long-term debt	28950	25004
total liabilities	40150	35554
stockholders equity
Common Stock	3107	3107
Additional Paid-in Capital	4000	4000
retained earnings	24410	23045
net income	3622	3004
dividends	-1790	-1638
treasury stock	-6500	-4200
total stockholders equity	26849	27318
total liabilities and stockholders equity	66999	62872