2. Answer the following questions regarding financial forecasting:

a. How are operating items projected on financial statements?

b. How are preliminary levels of debt, preferred stock, common stock, and dividends projected?

c. Suppose COGS is currently 67% of sales and over the next year sales growth by 5% and growth

COGS is 3%. Do you predict the COGS as a percent of sales will increase, increase, or remain the

same over the next year? Explain and verify your intuition by calculating the COGS be as a percent

of sales at year-end?

d. What is the financing surplus or deficit in general? How is it calculated?