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Ch 0 3 - Assignment - Financial Statements, Cash Flow, and Taxes Income statement The income statement, also known as the profit and loss (
Ch Assignment Financial Statements, Cash Flow, and Taxes
Income statement
The income statement, also known as the profit and loss P&L statement, provides a snapshot of the financial performance of a company during a
specified period of time. It reports a firm's gross income, expenses, net income, and the income that is available for distribution to its preferred 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
period in which they were incurred, not necessarily when cash was received or paid. Investors and analysts use the information given in the income
statement and other financial statements and reports to evaluate the company's financial performance and condition.
Consider the following scenario:
Cute Camel Woodcraft Company's income statement reports data for its first year of operation. The firm's CEO would like sales to increase by
next year.
Cute Camel is able to achieve this level of increased sales, but its interest costs increase from to of earnings before
interest and taxes EBIT
The company's operating costs excluding depreciation and amortization remain at of net sales, and its depreciation and
amortization expenses remain constant from year to year.
The company's tax rate remains constant at of its pretax income or earnings before taxes EBT
In Year Cute Camel expects to pay $ and $ of preferred and common stock dividends, respectively.
Complete the Year income statement data for Cute Camel, then answer the questions that follow. Be sure to round each dollar value to the nearest
whole dollar.
Complete the Year income statement data for Cute Camel, then answer the questions that follow. Be sure to round each dollar value to the nearest whole dollar.
Cute Camel Woodcraft Company
Income Statement for Year Ending December
tableAYear Year ForecastedNet sales,$$Less: Operating costs, except depreciation and amortization,Less: Depreciation and amortization expenses,Operating income or EBIT$$Less: Interest expense,Pretax income or EBTLess: Taxes Earnings after taxes,$$Less: Preferred stock dividends,Earnings available to common shareholders,Less: Common stock dividends,Contribution to retained earnings,$$
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