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1. Cold Goose is able to achieve this level of increased sales, but its interest costs increase from 10% to 15% of earnings before interest
1. Cold Goose is able to achieve this level of increased sales, but its interest costs increase from 10% to 15% of earnings before interest and taxes (EBIT). 2. The company's operating costs (excluding depreciation and amortization) remain at 70% of net sales, and its depreciation and amortization expenses remain constant from year to year. 3. The company's tax rate remains constant at 25% of its pre-tax income or earnings before taxes (EBT). 4. In Year 2, Cold Goose expects to pay $200,000 and $1,922,063 of preferred and common stock dividends, respectively. Complete the Year 2 income statement data for Cold Goose, then answer the questions that follow. Be sure to round each dollar value vhole dollar. answer the questions that follow. Be sure to round each dollar value to Net sales Less: Operating costs, except depreciation and amortization Less: Depreciation and amortization expenses Operating income (or EBIT) Cold Goose Metal Works Inc. Income Statement for Year Ending December 31 Less: Interest expense Pre-tax income (or EBT) Year 1 $30,000,000 Less: Taxes (25%) Earnings after taxes Less: Preferred stock dividends Earnings available to common shareholders Less: Common stock dividends 21,000,000 1,200,000 $7,800,000 Year 2 (Forecasted) $375,500,000 26,250,000 Contribution to retained earnings 180,000 7,020,000 1,200,000 Given the results of the previous income statement calculations, complete the following statements: $10,050.000 In Year 2, if Cold Goose has 5,000 shares of preferred stock issued and outstanding, then each preferred share should expect to receive in annual dividends. has 400,000 shares of common stock issued and outstanding, then the firm's earnings per share (EPS) is expected to change from $80.00 in Year 1 to in Year 2 1,755,000 $5,265,000 200,000 5,065,000 1.507,500 8,542,500 1,579,500 $3,485,500 2,135,625 $6 406.875 here to search 200,000 6,206,875 1,922,063 $4,284,812 13 ASUS VivoBook 3 $ 15 9 4 % 16 75F Sunny 5 A E (20s E a 6 & R 19 home D T. OC Vloend es es E Contribution to retained earnings ed stock dividends s available to common shareholders 55: Common stock dividends It is 1,200,000 CO $7,800,000 780,000 7,020,000 1,755,000 $5,265,000 200,000 9331421508469846353583121&eISBN=9781337911009&id=1351048726&s 5,065,000 1,200,000 1,579,500 $3,485,500 to search $10.050,000 1,507,500 Given the results of the previous income statement calculations, complete the following statements: 8,542,500 2,135,625 $6,406,875 200.000 o 6,206,875 $4,284,812 1.922.063 O BE g Grade It Now 96 Is 609 In Year 2, if Cold Goose has 5,000 shares of preferred stock issued and outstanding, then each preferred share should expect to receive in annual dividends. If Cold Goose has 400,000 shares of common stock issued and outstanding, then the firm's earnings per share (EPS) is expected to change from v in Year 1 to in Year 2. Cold Goose's earnings before interest, taxes, depreciation and amortization (EBITDA) value changed from in Year 1 to in Year 2. to say that Cold Goose's net inflows and outflows of cash at the end of Years 1 and 2 are equal to the company's annual to retained earnings, $3,485,500 and $4,284,812, respectively. This is because V of the items reported in the income statement involve payments and receipts of cash. 16 2 ASUS VivoBook Save & Continue . 8 Continue without saving O hom 9
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