You are the most creative analyst for Green Rabbit Transportation Inc., and your admirers want to see you work your analytical magic once more. 2016 Actual Results 2017 Initial Forecast Net sales $16,000 $24,000 (12,800) (19,200) Cost of goods sold Gross profit Fixed operating costs except depreciation $3,200 $4,800 (800) (320) (1,200) (480) Depreciation Earnings before interest and taxes $3,120 $2,080 (320) Interest Earnings before taxes $1,760 (704) (320) $2,800 (1,120) 1,680 Taxes Net income $1,056 Common dividends (570.24) (570.24) Addition to retained earnings $485.76 $1,109.76 Earnings per share $52.8 $84 $28.512 $28.512 Dividends per share Number of common shares (millions) 20.0 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 Green Rabbit Transportation Inc. will decrease due to economies of scale. No excess capacity currently exists. Green Rabbit Transportation Inc. will be issuing additional debt in the coming year. Spontaneously generated funds will sufficiently cover any financing needs. Green Rabbit Transportation Inc. will be issuing additional shares of common stock in the coming year. O The forecasted increase in net sales is 50%. If Green Rabbit Transportation 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? alternative fiduciary necessities additional financing needed tes payable additional funds needed added fair needs I. Issuing additional common stock II. Borrowing from a bank using notes payable III. Issuing long-term bonds I and II II and III O I, II, and III O I only Just II Just III You are the most creative analyst for Green Rabbit Transportation Inc., and your admirers want to see you work your analytical magic once more. 2016 Actual Results 2017 Initial Forecast Net sales $16,000 $24,000 (12,800) (19,200) Cost of goods sold Gross profit Fixed operating costs except depreciation $3,200 $4,800 (800) (320) (1,200) (480) Depreciation Earnings before interest and taxes $3,120 $2,080 (320) Interest Earnings before taxes $1,760 (704) (320) $2,800 (1,120) 1,680 Taxes Net income $1,056 Common dividends (570.24) (570.24) Addition to retained earnings $485.76 $1,109.76 Earnings per share $52.8 $84 $28.512 $28.512 Dividends per share Number of common shares (millions) 20.0 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 Green Rabbit Transportation Inc. will decrease due to economies of scale. No excess capacity currently exists. Green Rabbit Transportation Inc. will be issuing additional debt in the coming year. Spontaneously generated funds will sufficiently cover any financing needs. Green Rabbit Transportation Inc. will be issuing additional shares of common stock in the coming year. O The forecasted increase in net sales is 50%. If Green Rabbit Transportation 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? alternative fiduciary necessities additional financing needed tes payable additional funds needed added fair needs I. Issuing additional common stock II. Borrowing from a bank using notes payable III. Issuing long-term bonds I and II II and III O I, II, and III O I only Just II Just
