A. britton string corp. manufactures specialty strings for musical instruments and tennis racquets. its most recent sales were $880 million; operating costs (excluding depreciation) were equal to 85% of sales; net fixed assets were $300 million; depreciation amounted to 10% of net fixed assets; interest expenses were $22 million; the state-plus-federal corporate tax rate was 25%; and it paid 40% of its net income out in dividends. given this information, construct its income statement. also calculate total dividends and the addition to retained earnings. report all dollar figures in millions.

Britton String Corp reported Net Income of $60 Million, out of which $24 Million were paid paid out in dividends and $36 Million were taken as addition to Retained Earnings.

Income Statement of the company is presented below. Please note that:

Explanation:

                                                   Britton String Corp.

                                                    Income Statement

Sales                                                                            $880  

Less: Operating Costs (Sales × 85%)                             ($748)

Earning before Interest, Tax,

Depreciation & Amortization (EBITDA)                     $132  

Less: Depreciation(Net Fixed Assets × 10%)                 $(30)

Earnings before Interest and Tax (EBIT)                      $102  

Less: Interest Expense                                                      $(22)

Earnings before Tax (EBT)                                              $80  

Corporate Tax (EBT × 25%)                                               $(20)

Net Income                                                                       $60  

Payment of Dividends (Net Income × 40%)                    $24  

Addition to Retained Earnings

(Net Income – Dividends paid)                                         $36