3. Financial statements and reports The income statement, also known as the profit and loss (P\&L) statement, provides a snapshot of the financial performance of a company during a specified period of time. It reports a firm's gross income, expenses, net income, and the income that is available for distribution to its preferred and common shareholders. The income statement is prepared using the generally accepted accounting principles (GAAP) that match the firm's revenues and expenses to the period in which they were incurred, not necessarily when cash was received or paid. Investors and analysts use the information given in the income statement and other financial statements and feports to evaluate the company's financial performance and condition. Consider the following scenario: Green Caterpillar Garden Supplies Inci's income statement reports data for its first year of operation. The firm's CEO would like sales to increase by 25% next year. 1. Green Caterpiliar is able to achieve this level of increased saies, but its interest costs increase from 10% to 15% of eamings before interest and taxes (EBIT). 2. The company's operating costs (excluding depreciation and amortization) remain at 75% of net sales, and its depreciation and amortization expenses remain constant from year to year. 3. The company's tax rate remains constant at 40% of its pre-tax income or eamings before taxes (EBT). 4. In Year 2 , Green Caterpillar expects to pay $200,000 and $833,850 of preferred and common stock dividends, respectively. Given the results of the previous income statement calculations, complete the following statements: - In Year 2, if Green Caterpillar has 5,000 shares of preferred stock issued and outstanding, then each preferred share should expect to receive in annual dividends. - If Green Caterpillar has 400,000 shares of common stock issued and outstanding, then the firm's earnings per share (EPS) is expected to change from in Year 1 to in Year 2. - Green Coterpillar's before interest, taxes, depreciation and amortization (EBITDA) value changed from in Year 1 to in Year 2. - It is to say that Green Caterpillar's net inflows and outflows of cash at the end of Years 1 and 2 are equal to the company's annual contribution to retained earnings, $1,387,600 and $1,745,650, respectively, This is because of the items reported in the income Siven the results of the previous income statement calculations, complete the following statements: In Year 2 , if Green Caterpillar has 5,000 shares of preferred stock issued and outstanding, then each preferred share should expect to recelve in annual dividends. - If Green Caterpillar has 400,000 shares of common stock issued and outstanding, then the firm's earnings per share (EPS) is expected to change from in Year 1 to in Year 2. - Green Caterpillar's before interest, taxes, depreciation and amortization (EBITDA) value changed from in Year 1 to in Year 2. - It is to say that Green Caterpillar's net inflows and outflows of cash at the end of Years 1 and 2 are equal to the company's annual contribution to retained earnings, $1,387,600 and $1,745,650, respectively. This is because of the items reported in the income statement involve payments and receipts of cash