Year 2 (Forecasted) Net sales Cold Goose Metal Works Inc. Income Statement for Year Ending December 31 Year 1 $30,000,000 21,000,000 1,200,000 $7,800,000 $35,162,360 24,613,652 1,200,000 $9,348,708 780,000 8,568,708 8,568,708 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 2,142,177 $6,426,631 7,020,000 1,755,000 $5,265,000 200,000 5,065,000 1,579,500 $3,485,500 200,000 6,226,531 1,941,719 $4,284,812 Contribution to retained earnings Given the results of the previous income statement calculations, complete the following statements: In Year 2, if Cold Goose has 5,000 shares of preferred stock issued and outstanding, then each preferred share should expect to receive $40.00 in annual dividends. If Cold Goose 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 . Cold Goose's earnings before interest, taxes, depreciation and amortization (EBITDA) value changed from in Year 1 to In Year 2 It is to say that Cold Goose'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, $3,485,500 and $4,284,812, respectively. This is because of the items reported in the income statement involve payments and receipts of cash. Year 2 (Forecasted) Net sales Cold Goose Metal Works Inc. Income Statement for Year Ending December 31 Year 1 $30,000,000 21,000,000 1,200,000 $7,800,000 $35,162,360 24,613,652 1,200,000 $9,348,708 780,000 8,568,708 8,568,708 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 2,142,177 $6,426,631 7,020,000 1,755,000 $5,265,000 200,000 5,065,000 1,579,500 $3,485,500 200,000 6,226,531 1,941,719 $4,284,812 Contribution to retained earnings Given the results of the previous income statement calculations, complete the following statements: In Year 2, if Cold Goose has 5,000 shares of preferred stock issued and outstanding, then each preferred share should expect to receive $40.00 in annual dividends. If Cold Goose 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 . Cold Goose's earnings before interest, taxes, depreciation and amortization (EBITDA) value changed from in Year 1 to In Year 2 It is to say that Cold Goose'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, $3,485,500 and $4,284,812, respectively. This is because of the items reported in the income statement involve payments and receipts of cash
