answers-odd-problems-ch24

answers-odd-problems-ch24 - Chapter 24 Bankruptcy,...

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Bankruptcy, Reorganization, and Liquidation SOLUTIONS TO END-OF-CHAPTER PROBLEMS 24-1 a. The pro forma balance sheet follows (in millions of dollars): Current assets $159 a Current liabilities $ 42 Net fixed assets 153 Advance payments 78 Goodwill 15 Reserves 6 Subordinated debentures 90 b $2.40 preferred stock, $37.50 par value (1,200,000 shares) 45 c Common stock, $1.50 par value (6,000,000 shares) 9 Retained earnings 57 Total assets $327 Total claims $327 Notes: a $168 less $9 used to retire the $10.50 preferred stock. b (1.2 million shares)($75 par value) = $90. c (1.2 million shares)($37.50 par value) = $45. b. The pro forma income statement (in millions of dollars) follows: Net sales $540.0 Operating expense 516.0 Net operating income $ 24.0 Other income 3.0 EBIT $ 27.0 Interest expense 7.2 a EBT $ 19.8 Taxes (50%) 9.9 Net income $ 9.9 Dividends on $2.40 preferred 2.9 b Income available to common stockholders $ 7.0 Notes: a 0.08($90 million par value) = $7.2. b
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This note was uploaded on 04/12/2011 for the course ECON 101 taught by Professor Buddin during the Spring '08 term at UCLA.

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answers-odd-problems-ch24 - Chapter 24 Bankruptcy,...

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