Solved: A The 2016 sales of Cumberland Industries were

455 000 000 operating

a. The 2016 sales of Cumberland Industries were $455,000,000; operating costs (excluding
depreciation) were equal to 85% of sales; net fixed assets were $67,000,000; depreciation
amounted to 10% of net fixed assets; interest expenses were $8,550,000; the state-plus-federal
corporate tax rate was 40%; and Cumberland paid 25% of its net income out in dividends.
Given this information, construct Cumberland's 2016 income statement. Also calculate total
dividends and the addition to retained earnings. (Hint: Start with the partial model in the file and
report all dollar figures in thousands to reduce clutter.)
b. The partial balance sheets of Cumberland Industries are shown here. Cumberland issued
$10,000,000 of new common stock in 2016. Using this information and the results from Part a,
fill in the missing values for common stock, retained earnings, total common equity, and total
liabilities and equity.
Cumberland Industries: Balance Sheets as of December 31
(Thousands of Dollars)
Cumberland Industries: Balance Sheets as of December 31
(Thousands of Dollars)
2016 2015
Assets
Cash.....................................................$ 91,450........$ 74,625
Short-term investments.................................11,400..........15,100
Accounts receivable....................................108,470..........85,527
Inventories................................................38,450..........34,982
Total current assets...................................$249,770.......$210,234
Net fixed assets..........................................67,000..........42,436
Total assets............................................$316,770.......$252,670
Liabilities and Equity
Accounts payable.....................................$ 30,761........$ 23,109
Accruals...................................................30,405.........22,656
Notes payable............................................12,717.........14,217
Total current liabilities...............................$ 73,883........$ 59,982
Long-term debt..........................................80,263..........63,914
Total liabilities.....................................$154,146........$123,896
Common stock..............................................?...........$ 90,000
Retained earnings...........................................?.............38,774
Total common equity .......................................?.........$128,774
Total liabilities and equity.................................? ......$252,670
c. Construct the statement of cash flows for 2016.

A The 2016 sales of Cumberland Industries were 455 000 000 operating

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