Answered step by step
Verified Expert Solution
Question
1 Approved Answer
3. Income statement specified period of time. It reports a firm's gross income, expenses, net income, and the income that is available for distribution to
3. Income statement specified period of time. It reports a firm's gross income, expenses, net income, and the income that is available for distribution to its prefered 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 statement and other financial statements and reports to evaluate the company's financial performance and condition. Consider the following scenario: Cold Goose Metal Works Inc.'s income statement reports data for its first year of operation. The firm's CEO would like sales increase by 25% next year. 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 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 25% of its pre-tax income or earnings before taxes (EBT). 4. In Year 2, Cold Goose expects to pay $300,000 and $1,172,601 of preferred and common stock dividends, respectively. whole dollar. Given the results of the previous income statement calculations, complete the following statements: - In Year 2, if Cold Goose has 25,000 shares of preferred stock issued and outstanding, then each preferred share should expect to receive in annual dividends. - If Cold Goose has 200,000 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. - Cold Goose's earnings before interest, taxes, depreciation and amortization (EBITDA) value changed from in Year 2. - It is 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 contribution to retained earnings, $869,437 and $1,133,180, respectively. This is because in the income statement involve payments and receipts of cash
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started