Back to Assignment Attempts: Keep the Highest: /3 6. Projected financial statements and basic analysis You are the most creative analyst for Saltwater Logistics Corp., 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 $20,000 (16,000) $4,000 (1,000) (400) $2,600 (400) $2,200 (880) $1,320 2017 Initial Forecast $24,000 (19,200) $4,800 (1,200) (480) $3,120 (400) $2,720 (1,088) 1.632 (712.8) $919.2 $81.6 (712.8) $607.2 $66 $35.64 $35.64 20.0 20.0 Which of the following are assumptions made by the initial income statement forecast? Check all that apply. Spontaneously generated funds will sufficiently cover any financing needs. The cost of sales percentage for Saltwater Logistics Corp. will decrease due to economies of scale. No excess capacity currently exists. Saltwater Logistics Corp. will be issuing additional shares of common stock in the coming year. O The forecasted increase in net sales is 20%. Saltwater Logistics Corp. will be issuing additional debt in the coming year. Which of the following could be a direct cause of financing feedback? 1. Issuing additional common stock II. Purchasing additional buildings with internally generated funds III. An unexpected increase in sales IV. Borrowing from the bank O II and IV O III and IV O I and 11 O III O II O IV O I and IV What is one of the potential consequences of financing feedback that might cause the actual financing needs to be higher than initially thought? Financing feedback might increase the length of the operating cycle. O spontaneously increase liabilities associated with the cost of goods sold. increase charges against net income, reducing the amount of available internally generated funds. O reduce the level of cash on hand. Back to Assignment Attempts: Keep the Highest: /3 6. Projected financial statements and basic analysis You are the most creative analyst for Saltwater Logistics Corp., 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 $20,000 (16,000) $4,000 (1,000) (400) $2,600 (400) $2,200 (880) $1,320 2017 Initial Forecast $24,000 (19,200) $4,800 (1,200) (480) $3,120 (400) $2,720 (1,088) 1.632 (712.8) $919.2 $81.6 (712.8) $607.2 $66 $35.64 $35.64 20.0 20.0 Which of the following are assumptions made by the initial income statement forecast? Check all that apply. Spontaneously generated funds will sufficiently cover any financing needs. The cost of sales percentage for Saltwater Logistics Corp. will decrease due to economies of scale. No excess capacity currently exists. Saltwater Logistics Corp. will be issuing additional shares of common stock in the coming year. O The forecasted increase in net sales is 20%. Saltwater Logistics Corp. will be issuing additional debt in the coming year. Which of the following could be a direct cause of financing feedback? 1. Issuing additional common stock II. Purchasing additional buildings with internally generated funds III. An unexpected increase in sales IV. Borrowing from the bank O II and IV O III and IV O I and 11 O III O II O IV O I and IV What is one of the potential consequences of financing feedback that might cause the actual financing needs to be higher than initially thought? Financing feedback might increase the length of the operating cycle. O spontaneously increase liabilities associated with the cost of goods sold. increase charges against net income, reducing the amount of available internally generated funds. O reduce the level of cash on hand
