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Please help me in answering the following: Consider teh following scenario: Fuzzy Button Clothing Company's income statement reports data for its first year of operation.
Please help me in answering the following:
Consider teh following scenario:
Fuzzy Button Clothing Company's income statement reports data for its first year of operation. The firm's CEO would like sales to increase by 25% next year. Fuzzy Button is able to achieve this level of increased sales, but its interest costs increase from 10% to 15% of earnings before interest and taxes (EBIT). The company's operating costs (excluding depreciation and amortization) remain at 60% of net sales, and its depreciation and amortization expenses remain constant from year to year. The company's tax rate remains constant at 40% of its pre-tax income or earnings before taxes (EBT). In Year 2, Fuzzy Button expects to pay $100,000 and $938,400 of preferred and common stock dividends, respectively. Complete the Year 2 income statement data for Fuzzy Button, then answer the questions that follow. Be sure to round each dollar value to the nearest whole dollar. Given the results of the previous income statement calculations, complete the following statements: In Year 2, if Fuzzy Button has 5,000 shares of preferred stock issued and outstanding, then each preferred share should expect to receive ____ in annual dividends. If Fuzzy Button has 400,000 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. Fuzzy Button's before interest, taxes, depreciation and amortization (EBITDA) value changed from ____ in Year 1 to ____ in Year 2. It is ____ to say that Fuzzy Button'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, $1,066,400 and $1,307,600, respectively. This is because ____ of the item reported in the income statement involve payments and receipts of cash
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