Cold Goose Metal Works Inc.

Income Statement for Year Ending December $31$

Year $1$

Net sales

Less: Operating costs, except depreciation and amortization

Less: Depreciation and amortization expenses

Operating income $($or EBIT$)$

Less: Interest expense

Pre$-$tax income $($or EBT$)$

Less: Taxes $(25\%)$

Earnings after taxes

Less: Preferred stock dividends

Earnings available to common shareholders

Less: Common stock dividends

Contribution to retained earnings

$$15,000,000$

$11,250,000$

$600,000$

$$3,150,000$

$315,000$

$2,835,000$

$708,750$

$$2,126,250$

$300,000$

$1,826,250$

$956,813$

$$869,437$

Year $2($Forecasted$)$

$$1,133,180$

Given the results of the previous income statement calculations, complete the following statements:

In Year $2,$ if Cold Goose has $25,000$ shares of preferred stock issued and outstanding, then each preferred share should expect to receive

in annual dividends.

If Cold Goose has $200,000$ shares of common stock issued and outstanding, then the firm's earnings per share $($EPS$)$ is expected to change from

in Year $1$ to

in Year $2.$

Cold Goose's earnings before interest, taxes, depreciation and amortization $($EBITDA$)$ value changed from

in Year $1$ to

in Year $2.$

It is

to say that Cold Goose's net inflows and outflows of cash at the end of Years $1$ and $2$ are equal to the company's annual

contribution to retained earnings, $$869,437$ and $$1,133,180,$ respectively. This is because

of the items reported in the income

statement involve payments and receipts of cash.