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Fuzzy utton Oothing Company's income statement reports data for its rrst year oroperation. The firm's CEO would like sales to inerease by 25% net year.
Fuzzy utton Oothing Company's income statement reports data for its rrst year oroperation. The firm's CEO would like sales to inerease by 25% net year. 1. Fuzry Btton is able to achieve this level of increased saes, but is interest costs increase from 10% to 15% of earnings before interest and taxes (EBIT) The company's operating costs (exdding depreciation and amortization) remain at 80% of net sales, and its depreciation and amortization expenses remain constant from year to year 2. 3. The company's tax rate remans orstant at 40% of its pre-tax income or earnings belore taxes (EBT) 4. In Year 2, Fuzzy Button expects to pay $100,000 and $856,800 of preferred and common stock dividends, respectively Complete the Year 2 income statement data for Fuzzy Button, then answer the questions that foilow. Be sure to round each dollar value to the nearest whole dollar Fuzzy Button Clothing Company Income Statement for Year Ending December 31 Year 2 (Forecasted) Year 1 $20,000,000 16,000,000 800,000 3,200,000 320,000 Net sales Less: Operating costs, except depreciation and amertization 800,000 Less: Depreciation and amortization experses Operating income (or EBIT) Less: Interest expese Pre-tax income (or EBT Less: Taxes (40%) Earnings after taxes 1,152,000 $1,728,000 100,000 1,628,000 Less: Preferred stock dividends Earnings available to common shareholders o search 0 4 6
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