6. Projected financial statements and basic analysis Aa Aa E 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 Cost of goods sold Earnings before interest and taxes Earnings per share Common dividends Net sales Interest Depreciation Fixed operating costs except depreciation Taxes (13,600) $2,210 $56 (606) $17,000 (340) (340) (850) (748) $1,870 $3,400 $516 20.0 $1,122 $30 (19,040) $3,094 $83 (606) $23,800 (340) (476) (1,190) (1,102) $2,754 $4,760 $1,046 Earnings before taxes Gross profit Addition to retained earnings Number of common shares (millions) Net income Dividends per share 20.0 1,652 $30 Which of the following are assumptions made by the initial income statement forecast? Check all that apply. The forecasted increase in net sales is 40%. No additional external financing will be required. The assigned depreciation method has changed. Additional external financing will be required by Avatar Animators Inc. The facility is currently operating at full capacity. The facility is not currently operating at full capacity. 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, II, and III O I and II Just III I only Just II O II and III 6. Projected financial statements and basic analysis Aa Aa E 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 Cost of goods sold Earnings before interest and taxes Earnings per share Common dividends Net sales Interest Depreciation Fixed operating costs except depreciation Taxes (13,600) $2,210 $56 (606) $17,000 (340) (340) (850) (748) $1,870 $3,400 $516 20.0 $1,122 $30 (19,040) $3,094 $83 (606) $23,800 (340) (476) (1,190) (1,102) $2,754 $4,760 $1,046 Earnings before taxes Gross profit Addition to retained earnings Number of common shares (millions) Net income Dividends per share 20.0 1,652 $30 Which of the following are assumptions made by the initial income statement forecast? Check all that apply. The forecasted increase in net sales is 40%. No additional external financing will be required. The assigned depreciation method has changed. Additional external financing will be required by Avatar Animators Inc. The facility is currently operating at full capacity. The facility is not currently operating at full capacity. 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, II, and III O I and II Just III I only Just II O II and