Decker Enterprises
Below Are the Simplified Current and Projected Financial

question 12

Multiple Choice

Decker Enterprises
Below are the simplified current and projected financial statements for Decker Enterprises. All of Decker's assets are operating assets. All of Decker's current liabilities are operating li abilities.
$\begin{array} { l c r } \text { Income statement } & \text { Current} & \text { Projected } \\ \text { Sales } & \text { na } & 1,500 \\ \text { Costs } & \text { na } & 1,080 \\ \text { Profit before tax } & \text { na } & 420 \\ \text { Taxes } ( 25 \% ) & \text { na } &\underline{ 105} \\ \text { Net income } & \text { na } & 315 \\ \text { Dividends } & \text { na } & 95 \end{array}$
$\begin{array} { l r r l r r } \text { Balance sheets } & \text { Current } & \text { Projected } & & \text { Current } & \text { Projected } \\ \text { Current assets } & 100 & 115 & \text { Current liabilities } & 70 & 81 \\ \text { Net fixed assets } & 1,200 & 1,440 & \text { Long-term debt } & 300 & 360 \\ & & & \text { Common stock } & 500 & 500 \\ & & & \text { Retained earnings } & 430 & 650 \end{array}$
-If Decker had a financing surplus, it could remedy the situation by

• A) borrowing on its line of credit.
• B) issuing more common stock.
• C) reducing its dividend.
• D) borrowing from its retained earnings
• E) paying a special dividend

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