6. 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 Net sales Cost of goods sold Gross profit Fixed operating costs except depreciation Depreciation Earnings before interest and taxes Interest Earnings before taxes Taxes Net income Common dividends Addition to retained earnings Earnings per share Dividends per share Number of common shares (millions) 2016 Actual Results $17,000 (13,600) $3,400 (850) (340) $2,210 (340) $1,870 (748) $1,122 (605.88) $516.12 $56.1 $30.294 20.0 2017 Initial Forecast $22,100 (17,680) $4,420 (1,105) (442) $2,873 (340) $2,533 (1,013.2) 1,519.8 (605.88) $913.92 $75.99 $30.294 20.0 Which of the following are assumptions made by the initial income statement forecast? Check all that apply. Avatar Animators Inc. will be issuing additional shares of common stock in the coming year. No excess capacity currently exists. O The forecasted increase in net sales is 30%. Spontaneously generated funds will sufficiently cover any financing needs. The cost of sales percentage for Avatar Animators Inc. will decrease due to economies of scale. Avatar Animators Inc. will be issuing additional debt in the coming year. 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. Borowing from a bank using notes payable III. Issuing long-term bonds I and II Just II I only Just III I, II, and III OII and