You are the most creative analyst for Blue Lemon Pharmaceutical Company, and your admirers want to see you work your analytical magic once more. Next Year's Initial Forecast This Year's Actual Results $16,000,000 Net sales $18,880,000 Cost of goods sold 12,800,000 15,104,000 Gross profit $3,200,000 $3,776,000 800,000 800,000 Fixed operating costs except depreciation Depreciation 320,000 377,600 $2,454,400 $2,080,000 Earnings before interest and taxes Interest 320,000 320,000 Earnings before taxes $1,760,000 $2,134,400 Taxes 704,000 853,760 Net income $1,056,000 $1,280,640 Common dividends 570,240 570,240 Addition to retained earnings Earnings per share $485,760 $0.21 $710,400 $0.26 Dividends per share $0.11 $0.11 Number of common shares (millions) 5.00 5.00 Which of the following are assumptions made by the initial income statement forecast? Check all that apply. The facility is currently operating at full capacity. The facility is not currently operating at full capacity. The assigned depreciation method has changed. No additional external financing will be required. Additional external financing will be required by Blue Lemon Pharmaceutical Company. Suppose Blue Lemon had neither sufficient excess capacity to handle any forecasted increases in operations nor sufficient retained earnings to increase the level of company asset up to the amount necessary for production. This deficiency is called These funds could be acquired in which of the following forms? Check all that apply. Issuing long-term bonds Repayment of notes payable Borrowing from a bank using notes payable Repayment of outstanding bonds You are the most creative analyst for Blue Lemon Pharmaceutical Company, and your admirers want to see you work your analytical magic once more. Next Year's Initial Forecast This Year's Actual Results $16,000,000 Net sales $18,880,000 Cost of goods sold 12,800,000 15,104,000 Gross profit $3,200,000 $3,776,000 800,000 800,000 Fixed operating costs except depreciation Depreciation 320,000 377,600 $2,454,400 $2,080,000 Earnings before interest and taxes Interest 320,000 320,000 Earnings before taxes $1,760,000 $2,134,400 Taxes 704,000 853,760 Net income $1,056,000 $1,280,640 Common dividends 570,240 570,240 Addition to retained earnings Earnings per share $485,760 $0.21 $710,400 $0.26 Dividends per share $0.11 $0.11 Number of common shares (millions) 5.00 5.00 Which of the following are assumptions made by the initial income statement forecast? Check all that apply. The facility is currently operating at full capacity. The facility is not currently operating at full capacity. The assigned depreciation method has changed. No additional external financing will be required. Additional external financing will be required by Blue Lemon Pharmaceutical Company. Suppose Blue Lemon had neither sufficient excess capacity to handle any forecasted increases in operations nor sufficient retained earnings to increase the level of company asset up to the amount necessary for production. This deficiency is called These funds could be acquired in which of the following forms? Check all that apply. Issuing long-term bonds Repayment of notes payable Borrowing from a bank using notes payable Repayment of outstanding bonds
