Statutory restrictions may prevent a company from paying ...

[fnuegbu]

Statutory restrictions may prevent a company from paying dividends if the firm's assets are less
  than the firm's liabilities.
 
  Indicate whether the statement is true or false

Question 2

Using the 2012 financial statements for DRE Corporation and this additional information, prepare a pro forma
  income statement and balance sheet for the year 2013.
 
  Determine the discretionary financing needed (DFN) and
  assume that if the DFN is positive, the company will increase long-term debt, and if DFN is negative, the
  company will pay back some long-term debt.
  Sales for next year (2013 ) are expected to increase by 300,000 to 1,800,000. The firm is running efficiently and
  at full capacity so that all assets and spontaneous liabilities are expected to increase proportionally with sales.
  The dividend payout ratio for 2013 will be 40.
  DRE Corporation
  2012 Financial Statements
  Income Statement ()
  Sales 1,500,000
  Net Income 250,000
  Balance Sheet ()
  Cash 400,000
  Accounts Receivable 450,000
  Inventory 350,000
  Property, Plant, & Equipment 650,000
  Total Assets 1,850,000
  Accounts Payable 200,000
  Short Term Notes Payable 250,000
  Long-term Debt 550,000
  Common Stock 200,000
  Retained Earnings 650,000
  Total Liabilities and Equity 1,850,000

[jomama]

Answer to Question 1

TRUE

Answer to Question 2

Income Statement ()
Sales 1,800,000
Net Income 300,000 (250,000/1,500,