You are the most creative analyst for Avatar Animators Inc., and your admirers want to see you work your analytical magic once more Net sales Cost of goods sold Gross profit Fixed operating costs except depreciation Depreciation Earnings before interest and taxes Interest Earnings before taxes 2016 Actual Results $19,000 (15,200) $3,800 (950) (380) $2,470 (380) $2,090 (836) $1,254 (677.16) 2017 Initial Forecast $28,500 (22,800) $5,700 (1,425) (570) $3,705 (380) $3,325 (1,330) Taxes Net income 1.995 Common dividends (677.16) $1,317.84 $576.84 Addition to retained earnings Earnings per share $99.75 Dividends per share Number of common shares (millions) $62.7 $33.858 20.0 $33.858 20.0 Addition to retained earnings $576.84 Earnings per share $1,317.84 $99.75 $33.858 $62.7 $33.858 20.0 Dividends per share Number of common shares (millions) 20.0 Which of the following are assumptions made by the initial income statement forecast? Check all that apply. The cost of sales percentage for Avatar Animators Inc. will decrease due to economies of scale. The forecasted increase in net sales is 50%. No excess capacity currently exists. Avatar Animators Inc. will be issuing additional shares of common stock in the coming year. Avatar Animators Inc. will be issuing additional debt in the coming year. Spontaneously generated funds will sufficiently cover any financing needs. + AA- If Avatar Animators Inc. had neither a sufficient amount of excess capacity to handle forecasted increases in operations nor the level of retained earnings required to increase asset levels up to the necessary level for production, this difference would be referred to as and could be acquired in which of the following forms? I. Issuing additional common stock II. Borrowing from a bank using notes payable III. Issuing long-term bonds O I and II I only O I, II, and III Just II Just III 11 and III If Avatar Animators Inc. had neither a sufficient amount of excess capacity to handle forecasted increases in operatio earnings required to increase asset levels up to the necessary level for production, this difference would be referred to and could be acquired in which of the following forms? alternative fiduciary necessities added fair needs tes payable additional funds needed additional financing needed I and II I only I, II, and III Just II Just III II and
