cial Statements, co FIOW and Taxes 3. Income statement The income statement, also known as the profit and loss (PAL) 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 ovalable for distribution to its preferred and common shareholders The income statement is prepared using the generally accepted accounting principles (GAAP) that match the nem's revenues and expenses to the period in which they were incurred, not rucessarily 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 senano: Cold Goose Metal Works Incs income statement reports data for its first year of operation. The firm CEO would like sales to increase by 25% next you 1. Cold Goose is able to achieve this level of increased sales, but its interest costs increase from 10 to 15% of comings before interest and taxes (EBIT) 2. The company operating costs (excluding Gepreciation and amortization remain at 70% net sales, and its depreciation and amortization expens remain constant from year to y at 3. The company's tax rate temos constant at 40% of its pretax income or warnings before taxes (ET) 4. In Year 2, Cold Goose expects to pay $200,000 and 51.537,650 ot preferred and common stock dividends, respectively Complete the Year 2 income statement data for Cold Goose, then answer the questions that follow. Be sure to round each dollar value to the nearest whole dollar Year 2 (Forecasted) 1.200,000 Net sales Less: Operating costs, except depreciation and amortization Less Depreciation and amortization expenses Operating income (or EBIT) Les Interest expense Dreas income (EBT) Less Taxes (40%) Earnings are Les preferred to dividends as well to common sherwolde Loss common stock dividonos Contributed Cold Goose Metal Works Inc. Income Statement for Year Ending December 31 Year 1 $30,000,000 21,000,000 1,200,000 $7,800,000 700,000 1,030,000 2.000.000 4,212,000 200,000 4,012.000 1.200.000 12200 SO Otherwise station complete Given the results of the previous income statement calculations, complete the following statements In Year 2 of Cold Goose Mas 5,000 shares of proferred stock issued and outstanding, then each preferred share should expect to receive In annual dividends . Cold Goose han 400.000 shares of common stock issued ana vutstanding, then the meanings per share TEPSI expected to change from in Year 1 to in Year 2 Cold Goose brings before interest taves depreciation and amortizabon (EBITDA value changed from in Voar to in Year . to say that cold we's not intows and outnows of cash at the end of years and 2 are equal to the company's annual contribution to wondering52,24400 367,050, respectively. This is because of the items reported in the income statement payment and color
