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. 2017 Initial Forecast $22,000 (17.600) $4,400 (1.100) (440) $2,860 (400) 2016 Actual Results Net sales $20,000 Cost of goods sold (16,000) Gross profit $4,000 Fixed operating costs except depreciation (1,000) Depreciation (400) Earnings before interest and taxes $2,600 Interest (400) Earnings before taxes $2,200 Taxes (880) Net income $1,320 Common dividends (712.8) Addition to retained earnings $6072 Earnings per share $66 Dividends per share $35.64 Number of common shares (millions) 20.0 $2,460 (984) 1.476 (712.8) $763.2 $73.8 $35.64 20.0 Which of the following are assumptions made by the initial income statement forecast? Check all that apply. No excess capacity currently exists. Avatar Animators Inc. will be issuing additional debt in the coming year, The forecasted increase in net sales is 10% Avatar Animators Inc. will be issuing additional shares of common stock in the coming year. 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. Which of the following are assumptions made by the initial income statement forecast? Check all that apply. No excess capacity currently exists. Avatar Animators Inc. will be issuing additional debt in the coming year. The forecasted increase in net sales is 10% Avatar Animators Inc. will be issuing additional shares of common stock in the coming year. 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. Ir 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 forma? additional financing needed additional funds needed tes payable alternative fiduciary necessities added fair needs I. Issuing additional common stock 11. Borrowing from a bank using notes payable III. Issuing long-term bonds Just 11 II and II Just III OT and 11 OI, II, and III ot only