The income statement, also known as the profit and loss (PBL) statement, provides a sinapshot of the financlal porformance of a company duiling a specified period of time. It reports a firm's gross income, expenses, net income, and the income that is available for distribution to its preferred and coinmon shareholders. The income statement is prepared using the generalty accepted accounting principles (GAAP) that mateh the firm's revenues and expenses to the period in which they were incurred, not necessanly when cash was received or paid. Inwestors 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 foliowing scenario: Green Caterpilar Garden Supplies incis income statement reports data for its first year of operation. The firm's CeO wouid like sales to increase by 25 next year: 1. Green Caterpillar is abie to achleve this level of increased sales, but its interest costs increase fram 10% to 15% of eamings before interest and taxes (EBIT). 2. The companys operating costs (exchuding depreciation and amartization) remain at 60% of net sales, and its depreciation and amortization expenses remain constant from year to year. 3. The company"s tax rate remains constant at 255 of iss prectax income or eamings before takes \{EDT\}. 5. In Year 2. Green Caterpilar expects to pay 5100,000 and $1,759,500 of preferfed and eemmen stock dividends, respectively. Compiete the Year ? income statement data for Geen Caterpillar, then answer the questions that followi lle sure to round each doliar value to the nearest whole dollare? Glven the results of the previous income statemest calcutations, complete the following statementst: - In Year 2; if Green Eaverpiliar has 5,000 thares of preferred stock issued and outstanding. then each preferred share shauld expect to receive in annual dividends - If Grecen Coterpiliar has 400,000 shares of common stock isswed and out standing, then the firm's earnings per share (Elis) is ekpected t change from infear 1 to in Year 2 . - Green Caterpithar' earnikgs before interest, teves, depreciabon and amortiration (taitoA) vaiuel changed from in Year 1 fo in Year 2 Given the results of the previous income statement calculations, complete the following statements: - In Year 2, if Green Caterpdlar has 5,000 shares of preferred stock issued and outstanding. then each preferred share should expect to receive io arnual dividends. - If Green Caterpilar 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: 2. - Green Caterpilar's earnings before interest, taxes, depreciation and amortization, (EBrrDA) value changed from in Year 1 to in year? 2. - It is to say that Green Cateroillar's net inflows and outhows of cash at the end of Years 1 and. 2 are equat to the company's annual contribution to retained eamings, $2,087,000 and $2,539,250, respectively. This is because of the items reported in the income statement involve payments and receipts of cash