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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 a specified

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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 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 common shareholders. The income statement is prepared using the generally accepted accounting principles (GAAP) that match the firm's 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 company's financial performance and condition Consider the following scenario: Blue Hamster Manufacturing Inc.'s income statement reports data for its first year of operation. The firm's CEO would like sales to increase by 25% next year. 1. Blue Hamster 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). 2. 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. 3. The company's tax rate remains constant at 40% of its pre-tax income or earnings before taxes (EBT). 4. In Year 2, Blue Hamster expects to pay $300,000 and $3,167,100 of preferred and common stock dividends, respectively. Complete the Year 2 income statement data for Blue Hamster, then answer the questions that follow. Be sure to round each dollar value to the nearest whole dollar Complete the Year 2 income statement data for Blue Hamster, then answer the questions that follow. Be sure to round each dollar value to the nearest whole dollar Blue Hamster Manufacturing Inc.Income Statement for Year Ending December 31 Year 2 (Forecasted) $ 1,200,000 Net sales Less: Operating costs, except depreciation and amortization Less: Depreciation and amortization expenses Operating income (or EBIT) Less: Interest expense Pre-tax income (or EBT) Less: Taxes (40%) Earnings after taxes Less: Preferred stock dividends Earnings available to common shareholders Less: Common stock dividends Contribution to retained earnings Year 1 $30,000,000 18,000,000 1,200,000 $10,800,000 1,080,000 $9,720,000 3,888,000 $5,832,000 300,000 $5,532,000 2,624,400 $2,907,600 $3,570,900 Given the results of the previous income statement calculations, complete the following statements: In Year 2, if Blue Hamster has 25,000 shares of preferred stock issued and outstanding, then each preferred share should expect to receive in annual dividends. Inster has 200,000 shares of common stock issued and outstanding, then the firm's earnings per share (EPS) is expected to change from $24.00 in Year 1 to in Year 2 $12.00 ter's before interest, taxes, depreciation and amortization (EBITDA) value changed from In Year 1 to in Year 2. $18.00 to say that Blue Hamster's net inflows and outflows of cash at the end of Years 1 and 2 are equal to the company's annual 530.00 In to retained earnings, $2,907,600 and $3,570,900, respectively. This is because of the items reported in the income statement involve payments and receipts of cash. Contribution to retained earnings $2,907,600 $3,570,900 $29.16 GN ults of the previous income statement calculations, complete the following statements: $48.60 $54.00 Blue Hamster has 25,000 shares of preferred stock issued and outstanding, then each preferred share should expect to receive in annual dividends $27.66 Jnster has 200,000 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. $2,907,600 $3,570,900 $35.19 Given the results of the prev he statement calculations, complete the following statements: $69.00 In Year 2, if Blue Hamster $33.69 o shares of preferred stock issued and outstanding, then each preferred share should expect to receive in annual di $58.65 . If Blue Hamster has 200,0 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 Blue Hamster's before interest, taxes, depreciation and amortization (EBITDA) value changed from in Year 1 to in Year 2 It is to say that Blue Hamster'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, $2,907,600 and $3,570,900, respectively. This is because of the items reported in the income statement involve payments and receipts of cash. Jiven the results of the previous income statement calculations, complete the following statements: $12,000,000 In Year 2, if Blue Hamster has 25,000 shares of preferred stock issued and outstanding, then each $14,688,000 should expect to receive in annual dividends. $16,632,000 If Blue Hamster has 200,000 shares of common stock issued and outstanding, then the firm's earni EPS) is expected to change from $28,800,000 in Year 1 to in Year 2 Blue Hamster's before interest, taxes, depreciation and amortization (EBITDA) value changed from in Year 1 to in Year 2. It is to say that Blue Hamster'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, $2,907,600 and $3,570,900, respectively. This is because of the items reported in the income statement involve payments and receipts of cash. Given the results of the previous income statement calculations, complete the following statements: $20,838,000 Hamster has 25,000 shares of preferred stock issued and outstanding, then each preferred share should expect to receive $15,000,000 annual dividends. $39,570,000 has 200,000 shares of common stock issued and outstanding, then the firm's earnings per share (EPS) is expected to change from Year 1 to in Year 2. $29,538,000 before interest, taxes, depreciation and amortization (EBITDA) value changed from in Year 1 to in Year 2. to say that Blue Hamster'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, 52,907,600 and $3,570,900, respectively. This is because of the items reported in the income In Year 2, Blue Hamster has 25,000 shares of preferred stock issued and outstanding, then each preferred share should expect to receive in annual dividends. If Blue Hamster has 200,000 shares of common stock issued and outstanding, then the firm's earings per share (EPS) is expected to change from Incorrect Year 1 to in Year 2 before interest, taxes, depreciation and amortization (EBITDA) value changed from in Year 1 to correct in Year 2 to say that Blue Hamster'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 earings, $2,907,600 and $3,570,900, respectively. This is because of the items reported in the income naman and recints of cash In Year 2, if Blue Hamster has 25,000 shares of preferred stock issued and outstanding, then each preferred share should expect to receive in annual dividends If Blue Hamster has 200,000 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 Blue Hamster's before interest, taxes, depreciation and amortization (EBITDA) value change all in Year 1 to in Year 2 all but one to say that Blue Hamster's net inflows and outflows of cash at the end o bare equal to the company's annual contribution to retained earnings, 92,907,600 and $3,570,900, respectively. This is because of the items reported in the income statement involve payments and receipts of cash

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