Projected financial statements and basic analysis.

you are the most creative analyst for saltwater logistics corp, and your admirers want to see you work your analytical magic once more.

6. Projected financial statements and basic analysis Aa Aa E You are the most creative analyst for Saltwater Logistics Corp., and your admirers want to see you work your analytical magic once more. 2016 Actual Results 2017 Initial Forecast (340) $4,760 $83 Interest Gross profit Earnings per share Common dividends Depreciation Number of common shares (millions) Dividends per share Cost of goods sold Earnings before interest and taxes Taxes Fixed operating costs except depreciation Earnings before taxes Addition to retained earnings Net income Net sales (340) $3,400 $56 (606) (340) 20.0 $30 (13,600) $2,210 (748) (850) $1,870 $516 $1,122 $17,000 (606) (476) 20.0 $30 (19,040) $3,094 (1,102) (1,190) $2,754 $1,046 1,652 $23,800 Which of the following are assumptions made by the initial income statement forecast? Check all that apply. O Spontaneously generated funds will sufficiently cover any financing needs. The forecasted increase in net sales is 40%. The cost of sales percentage for Saltwater Logistics Corp. will decrease due to economies of scale. Saltwater Logistics Corp. will be issuing additional shares of common stock in the coming year. No excess capacity currently exists. Saltwater Logistics Corp. will be issuing additional debt in the coming year. O O Which of the following could be a direct cause of financing feedback? I. Issuing additional common stock II. Purchasing additional buildings with internally generated funds III. An unexpected increase in sales IV. Borrowing from the bank O IV O I and IV O I and II O II and IV III and IV O III OI What is one of the potential consequences of financing feedback that might cause the actual financing needs to be higher than initially thought? Financing feedback might: O O Reduce the level of cash on hand Increase the length of the operating cycle Spontaneously increase liabilities associated with the cost of goods sold Increase charges against net income, reducing the amount of available internally generated funds