3. Projected financial statements and basic analysis Aa Aa You are the most creative analyst for Avatar Animators Inc., and your admirers want to see you work your analytical magic once more. 2016 Actual Results 2017 Initial Forecast $2,574 20.0 Earnings before interest and taxes Number of common shares (millions) Interest Cost of goods sold Earnings before taxes Gross profit Taxes Fixed operating costs except depreciation Addition to retained earnings Common dividends Earnings per share Depreciation Net sales Net income Dividends per share $2,340 20.0 (360) (14,400) $1,980 $3,600 (792) (900) $546 (642) $59 (360) $18,000 $1,188 $32 (360) (15,840) $2,214 $3,960 (886) (990) $686 (642) $66 (396) $19,800 1,328 $32 Which of the following are assumptions made by the initial income statement forecast? Check all that apply. Spontaneously generated funds will sufficiently cover any financing needs. The cost of sales percentage for Avatar Animators Inc. will decrease due to economies of scale. No excess capacity currently exists. O The forecasted increase in net sales is 10%. Avatar Animators Inc. will be issuing additional debt in the coming year. Avatar Animators Inc. will be issuing additional shares of common stock in the coming year. 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 Just II I only I, II, and III II and III Just III I and