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.

2. See the last page for the financial information of Royal Corporation.

2 A. Construct Income Statements for 2018 and 2019
                                                2019                          2018

2B. Construct Balance Sheets for 2018 and 2019
                                      Assets                                               Liabilities and Owners’ Equity

                             2019              2018                                                             2019                2018


2C. Construct a 2019 Statement of Cash Flows (Goodwill reduction is a noncash expense)

Answer 1