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The income statement, also known as the profit and loss ( P&L ) statement, provides a snapshot of the financial performance of a company during
The income statement, also known as the profit and loss P&L statement, provides a snapshot of the financial performance of a company during a specified period of time. It reports a firms gross income, expenses, net income, and the income that is available for distribution to its preferred and common shareholders.
The income statement is prepared using the generally accepted accounting principles GAAP that match the firms revenues and expenses to the period in which they were incurred, not necessarily when cash was received or paid. Investors and analysts use the information given in the income statement and other financial statements and reports to evaluate the companys financial performance and condition.
Consider the following scenario:
Green Caterpillar Garden Supplies Inc.s income statement reports data for its first year of operation. The firms CEO would like sales to increase by next year.
Green Caterpillar is able to achieve this level of increased sales, but its interest costs increase from to of earnings before interest and taxes EBIT
The companys operating costs excluding depreciation and amortization remain at of net sales, and its depreciation and amortization expenses remain constant from year to year.
The companys tax rate remains constant at of its pretax income or earnings before taxes EBT
In Year Green Caterpillar expects to pay $ and $ of preferred and common stock dividends, respectively.
Complete the Year income statement data for Green Caterpillar, then answer the questions that follow. Be sure to round each dollar value to the nearest whole dollar.
Complete the Year income statement data for Green Caterpillar, then answer the questions that follow. Be sure to round each dollar value to the nearest whole dollar.
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