Reorganization The Verbrugge Publishing Company's 2019 balance sheet and income statement are as follows (in millions of dollars). Balance Sheet Current assets Net fixed assets Interest EBT Taxes (25%) Net income Dividends on $2.20 preferred Income available to common stockholders c. What were the total cash flows received by the noncallable preferred stockholders prior to the reorganization? What were the total cash flows to the original noncallable preferred stockholders after the reorganization? Do not round intermediate calculations. Enter your answers in millions. For example, an answer of $1.23 million should be entered as 1.23 , not 1,230,000. Round your answers to two decimal places. Total cash flow to noncallable preferred stockholders before recapitalization: $ million Total cash flow to noncallable preferred stockholders after recapitalization: $ million What was the net income to common stockholders before the reorganization? After the reorganization. Do not round intermediate calculations. Enter your answers in millions. For example, an answer of $1.23 million should be entered as 1.23 , not 1,230,000. Round your answers to two decimal places. Net income to common stockholders before recapitalization: $ million Net income to common stockholders after recapitalization: $ million d. Required pre-tax earnings are defined as the amount that is just large enough to meet fixed charges (debenture interest and/or preferred dividends). What are the required pre-tax earnings before and after the recapitalization? Do not round intermediate calculations. Enter your answers in millions. For example, an answer of $1.23 million should be entered as 1.23, not 1,230,000. Round your answers to two decimal places. Required pre-tax earnings before recapitalization: $ million Required pre-tax earnings after recapitalization: $ million e. How is the debt ratio (i.e., liabilities/total assets) affected by the reorganization? Round your answers to two decimal places. Debt ratio before reorganization: % Debt ratio after reorganization: % Suppose you treated preferred stock as debt and calculated the resulting debt ratios. How are these ratios affected? Debt ratio before reorganization: % Debt ratio after reorganization: % If you were a holder of Verbrugge's common stock, would you vote in favor of the reorganization? Why or why not? -Select-YesNoItem 33 , because (1) earnings to shareholders are -Select- increaseddecreaseditem 34,(2) earnings required to cover fixed charges (including preferred dividends) are -Select-increaseddecreaseditem 35 , and (3) income debentures are -Select- lessmoreItem 36 risky to the shareholders than preferred stock. Total assets What is the value for debt (i.e., liabilities)? Do not treat preferred stock as debt. Enter your answer in millions. For example, an answer of $1 million should be entered as 1 , not 1,000,000. Round your answer to the nearest whole number. $ million b. Construct the projected income statement. What is the income available to common shareholders in the proposed recapitalization? Do not round intermediate calculations. Enter your answers in millions. For example, an answer of $1.23 million should be entered as 1.23 , not 1,230,000. Round your answers to two decimal places. The projected income statement (in millions of dollars) follows: Net sales Operating expense Net operating income Other income

Question

Reorganization The Verbrugge Publishing Company's 2019 balance sheet and income statement are as follows (in millions of dollars). Balance Sheet Current assets Net fixed assets Interest EBT Taxes (25%) Net income Dividends on $2.20 preferred Income available to common stockholders c. What were the total cash flows received by the noncallable preferred stockholders prior to the reorganization? What were the total cash flows to the original noncallable preferred stockholders after the reorganization? Do not round intermediate calculations. Enter your answers in millions. For example, an answer of $1.23 million should be entered as 1.23 , not 1,230,000. Round your answers to two decimal places. Total cash flow to noncallable preferred stockholders before recapitalization: $ million Total cash flow to noncallable preferred stockholders after recapitalization: $ million What was the net income to common stockholders before the reorganization? After the reorganization. Do not round intermediate calculations. Enter your answers in millions. For example, an answer of $1.23 million should be entered as 1.23 , not 1,230,000. Round your answers to two decimal places. Net income to common stockholders before recapitalization: $ million Net income to common stockholders after recapitalization: $ million d. Required pre-tax earnings are defined as the amount that is just large enough to meet fixed charges (debenture interest and/or preferred dividends). What are the required pre-tax earnings before and after the recapitalization? Do not round intermediate calculations. Enter your answers in millions. For example, an answer of $1.23 million should be entered as 1.23, not 1,230,000. Round your answers to two decimal places. Required pre-tax earnings before recapitalization: $ million Required pre-tax earnings after recapitalization: $ million e. How is the debt ratio (i.e., liabilities/total assets) affected by the reorganization? Round your answers to two decimal places. Debt ratio before reorganization: % Debt ratio after reorganization: % Suppose you treated preferred stock as debt and calculated the resulting debt ratios. How are these ratios affected? Debt ratio before reorganization: % Debt ratio after reorganization: % If you were a holder of Verbrugge's common stock, would you vote in favor of the reorganization? Why or why not? -Select-YesNoItem 33 , because (1) earnings to shareholders are -Select- increaseddecreaseditem 34,(2) earnings required to cover fixed charges (including preferred dividends) are -Select-increaseddecreaseditem 35 , and (3) income debentures are -Select- lessmoreItem 36 risky to the shareholders than preferred stock. Total assets What is the value for debt (i.e., liabilities)? Do not treat preferred stock as debt. Enter your answer in millions. For example, an answer of $1 million should be entered as 1 , not 1,000,000. Round your answer to the nearest whole number. $ million b. Construct the projected income statement. What is the income available to common shareholders in the proposed recapitalization? Do not round intermediate calculations. Enter your answers in millions. For example, an answer of $1.23 million should be entered as 1.23 , not 1,230,000. Round your answers to two decimal places. The projected income statement (in millions of dollars) follows: Net sales Operating expense Net operating income Other income

Accepted Answer

However, I can guide you through the thought process to solve this problem.Here's how to approach…