The income statement, also known as the prort and loss (PAL) 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: Green Caterpillar Garden Supples 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. Green Caterpillar 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 25% of its pre-tax income or earnings before taxes (EBT). 4. In Year 2, Green Caterpillar expects to pay $100,000 and $1,759,500 or preferred and common stock dividends, respectively. Complete the Year 2 income statement data for Green Caterpiliar, then answer the questions that follow. Be sure to round each dollar value to the nearest whole dollar. Year 2 (Forecasted) Net sales 600,000 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 (25%) Earnings after taxes Less: Preferred stock dividends Earnings available to common shareholders Less: Common stock dividends Contribution to retained earnings Green Caterpillar Garden Supplies Inc. Income Statement for Year Ending December 31 Year 1 $15,000,000 9,000,000 600,000 $5,400,000 540,000 4,860,000 1,215,000 $3,645,000 100,000 3,545,000 1,458,000 $2,087,000 $2,539,250 Given the results of the previous income statement calculations, complete the following statements: In Year 2, ir Green Caterpillar has 5,000 shares of preferred stock issued and outstanding, then each preferred share should expect to receive in annual dividends. If Green Caterpillar has 400,000 shares of common stock issued and outstanding, then the firm's comings per share (EPS) is expected to change In Year 2 Green Caterpillar's earnings before interest, taxes, depreciation and amortization (EBITDA) Value changed from in Year 1 to from in Year 1 to in Year 2 . It is to say that Green Caterpillar'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, $2,087,000 and $2,539,250, respectively. This is because of the items reported in the income statement involve payments and receipts of cash. Grade It Now Save & Continue Continue without saving UUUU 600,000 Operating income (or EBIT) Less: expense Pre-to - EBT) Less: Taxes (25%) $5,400,000 540,000 Earnings after taxes Less: Preferred stock dividends Earnings available to common shareholders 4,860,000 1,215,000 $3,645,000 100,000 3,545,000 1,458,000 Less: Common stock dividends Contribution to retained earnings $2,087,000 $2,539,250 Given the results of the previous income statement calculations, complete the following statements: In Year 2, if Green Caterpillar has 5,000 shares of preferred stock issued and outstanding, then each preferred share should expect to receive in annual dividends. aterpillar has 400,000 shares of common stock issued and outstanding, then the firm's earnings per share (EPS) is expected to change $50.00 in Year 1 to Yin Year 2 $20.00 rpillar's earnings before interest, taxes, depreciation and amortization (EBITDA) value changed from in Year 1 to In Year 2 $40.00 to say that Green Caterpillar's net inflows and outflows of cash at the end of Years 1 and 2 are equal to the company's annual $30.00 In to retained earnings, $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. Grade It Now Save & Continue Continue without saving 600,000 5 Operating income (or EBIT) rense Pre-tax in EBT) Less: Taxes (25%) Earnings after taxes Less: Preferred stock dividends Earnings available to common shareholders Less: Common stock dividends Contribution to retained earnings $5,400,000 540,000 4,860,000 1,215,000 $3,645,000 100,000 3,545,000 1,458,000 $2,087,000 $2,539,250 Given the $9.11 bf the previous income statement calculations, complete the following statements: $13.50 in Year 1 to In Yed $8.86 len Caterpillar has 5,000 shares of preferred stock Issued and outstanding, then each preferred share should expect to receive annual dividends. $12.15 If Gre Jitar 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 Caterpillar's earnings before interest, taxes, depreciation and amortization (EBITDA) value changed from In Year 1 to in Year 2 It is to say that Green Caterpillar'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, $2,087,000 and $2,539,250, respectively. This is because of the items reported in the income statement involve payments and receipts of cash. Grade It No Save & Continue Continue without saving Pre-tax inc 9T) 4,860,000 Less: Taxes i 1,215,000 Earnings after taxes $3,645,000 Less: Preferred stock dividends 100,000 Earnings available to common shareholders 3,545,000 Less: Common stock dividends 1,458,000 Contribution to retained earnings $2,087,000 $2,539,250 $17.25 Given the results of the previous in ement calculations, complete the following statements: $11.00 In Year 2, if Green Caterpillar hal $10.75 ares of preferred stock issued and outstanding, then each preferred share should expect to receive in annual dividend $14.66 If Green Caterpillar has 400,000 common stock issued and outstanding, then the firm's earnings per share (EPS) is expected to change In Year 1 1 to in Year 2 Green Caterpillar's earnings before interest, taxes, depreciation and amortization (EBITDA) value changed from in Year 1 to in Year 2. It is to say that Green Caterpillar'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, $2,087,000 and $2,539,250, respectively. This is because of the items reported in the income statement involve payments and receipts of cash. from Grade It Now Save & Continue Continue without saving MERCI Pre 600,000 S ST) Less: Depreciation and amortization expenses Operating income (or EBIT) Less: Interest expense Pre-taxi Less: Taxes Earnings after taxes Less: Preferred stock dividends Earnings available to common shareholders Less: Common stock dividends Contribution to retained earnings 600,000 $5,400,000 540,000 4,860,000 1,215,000 $3,645,000 100,000 3,545,000 1,458,000 $2,087,000 $2,539,250 Given the results of the previous income statement calculations, complete the following statements: in Year 1 to $11,298,750 en Caterpillar has 5,000 shares of preferred stock issued and outstanding, then each preferred share should expect to receive $19,785,000 annual dividends. $15,648,750 tar has 400,000 shares of common stock issued and outstanding, then the firm's earnings per share (EPS) is expected to change In Year 2. $7,500,000 t's earnings before interest, taxes, depreciation and amortization (EBITDA) value changed from in Year 1 to in Year 2 It is to say that Green Caterpillar'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, $2,087,000 and $2,539,250, respectively. This is because of the items reported in the income statement involve payments and receipts of cash. Grade It Now Save & Continue Continue without saving 600,000 Less: Depreciation and amortization expenses Operating Income (or EBIT) Less: Interest expense Pre-tax ince EBT) Less: Taxe Earnings after taxes Less: Preferred stock dividends Earnings available to common shareholders Less: Common stock dividends Contribution to retained earnings 600,000 $5,400,000 540,000 4,860,000 1,215,000 $3,645,000 100,000 3,545,000 1,458,000 $2,087,000 $ 52,539,250 Given the results of the previous income statement calculations, complete the following statements: correct in Year 1 to In Year 2, ir Green Caterpillar has 5,000 shares of preferred stock issued and outstanding, then each preferred share should expect to receive in annual dividends. If Green Caterpillar 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. . Gree 's earnings before interest, taxes, depreciation and amortization (EBITDA) value changed from in Year 1 to Incorrect in Year 2. . It is to say that Green Caterpillar's net inflows and outflows of cash at the end of Years 1 and 2 are equal to the company's annua contribution to retained earnings, $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. Grade It Now Save & Continue Continue without saving Ovu,uuu Operating income (or EBIT) Less. Interest expense Pre-tax Inco T) Less: Taxes Earnings after taxes Less: Preferred stock dividends Earnings available to common shareholders Less: Common stock dividends Contribution to retained earnings $5,400,000 540,000 4,860,000 1,215,000 $3,645,000 100,000 3,545,000 1,458,000 $2,087,000 $2,539,250 Given the results of the previous income statement calculations, complete the following statements: In Year 2, if Green Caterpillar has 5,000 shares of preferred stock issued and outstanding, then each preferred share should expect to receive in annual dividends. . If Green Caterpillar 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. Green Caterpillar's earnings before interest, taxes, depreciation and amortization (EBITDA) VA from in Year 1 to In Year 2 all but one to say that Green Caterpillar's net inflows and outflows of cash at the er und 2 are equal to the company's annual contribution to retained earnings, $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. all It is Grade It Now Save & Continue Continue without saving