11. Projected financial statements and basic analysis You are the most creative analyst for Avatar Animators Inc., and your admirers want to see you work your analytical magic once more. 2016 Actual Results 2017 Initial Forecast Interest (360) (360) Addition to retained earnings $546 $1,248 Depreciation (360) (540) Earnings before taxes $1,980 $3,150 Dividends per share $32 $32 Net sales $18,000 $27,000 (1,260) Taxes (792) 20.0 20.0 Number of common shares (millions) Fixed operating costs except depreciation (900) (1,350) Earnings before interest and taxes $2,340 $3,510 Common dividends (642) (642) Earnings per share $59.4 $95 Gross profit $3,600 $5,400 Cost of goods sold (14,400) $1,188 (21,600) 1,890 Net income Which of the following are assumptions made by the initial income statement forecast? Check all that apply. O Avatar Animators Inc. will be issuing additional debt in the coming year. O No excess capacity currently exists. The cost of sales percentage for Avatar Animators Inc. will decrease due to economies of scale. The forecasted increase in net sales is 50%. Avatar Animators Inc. will be issuing additional shares of common stock in the coming year. Spontaneously generated funds will sufficiently cover any financing needs. If Avatar Animators Inc. had neither a sufficient amount of excess capacity to handle forecasted increases in operations nor the level of retained earnings required to increase asset levels up to the necessary level for production, this difference would be referred to as and could be acquired in which of the following forms? I. Issuing additional common stock II. Borrowing from bank using notes payable III. Issuing long-term bonds O I only O I and II Just II O Just III II and III O I, II, and