6. Projected financial statements and basic analysis You are the most creative analyst for Black Sheep Broadcasting Company, and your admirers want to see you work your analytical magic once more 2016 Actual Results Net sales $20,000 Cost of goods sold (16,000) Gross profit $4,000 Fixed operating costs except depreciation (1,000) Depreciation (400) Earnings before interest and taxes $2,600 Interest (400) Earnings before taxes $2,200 Taxes (880) Net Income $1,320 Common dividends (712.8) Addition to retained earnings $6072 Earnings per share Dividends per share $35.64 Number of common shares (millions) 20.0 2017 Initial Forecast $24,000 (19,200) $4,800 (1,200) (480) $3,120 (400) $2,720 (1,088) 1,632 (712.B) 5919.2 $66 $81.6 $35.64 20.0 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 forecasted increase in net sales is 20%. The cost of sales percentage for Black Sheep Broadcasting Company will decrease due to economles of scale. No excess capacity currently exists. Black Sheep Broadcasting Company will be issuing additional shares of common stock in the coming year. Black Sheep Broadcasting Company will be issuing additional debt in the coming year. Which of the following could be a direct cause of financing feedback? 1. Issuing additional common stock 11. Purchasing additional buildings with internally generated funds III. An unexpected increase in sales IV. Borrowing from the bank 01 O III I and IV O I and II III and IV O II and IV TV II What is one of the potential consequences of financing feedback that might cause the actual financing needs to be higher than initially thought? Financing feedback might O reduce the level of cash on hand, Increase the length of the operating cycle. Increase charges against net income, reducing the amount of available internally generated funds. What is one of the potential consequences of financing feedback that might cause the actual financing needs to be higher than initially thought? Financing feedback might reduce the level of cash on hand. increase the length of the operating cycle. Increase charges against net income, reducing the amount of available internally generated funds. spontaneously increase ilabilities associated with the cost of goods sold