3. Income statement specalled pernod of time. It reports a firms gross income, expenses, net income, and the income that is avalable for distribution to its preferred and corrmon sharehoiders. The income statement is prepored usung the generally accopted accounting prinoples (GAAp) that match the firm's revenues and expesises to the period in which they were incamed, not necessavly wher cash was recelved or paid. Irvestors and bnalysts use the information given in the income statement and other firwaicial statements and reports to evaluate the company's financial pefformance and condition. Consider the following scenario: Green Caterpiliar Corden Supplies inc's income statement reports data for its first year of operation. The firm's CEO would ike soles to increase by 25% next year. 1. Creen Caterpiliar is able to achueve this leve of increased soles, but its interest costs increase from 10% to 15% of earnings before interest and taxes (EBII). 2. The company's operating costs (excluding depreciation and amortzotion) remain at 6096 of net saies, and its depredation and amortization expenses remain constant from year to veas. 7. The company's tax rate remains constant at 40% of its pre-tax income or earnings befori taxes (EBT). 4. In Year 2, Green Catejpillar expects to pay $100,000 and $1,407,600 of preferred and cornimon stock dividends, respectively