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. Net sales Cost of goods sold Gross profit Fixed operating costs except depreciation Depreciation 2016 Actual Results $20,000 (16,000) $4,000 (1,000) (400) $2,600 (400) $2,200 (880) 2017 Initial Forecast $24,000 (19,200) $4,800 (1,200) (480) $3,120 (400) Earnings before interest and taxes Interest Earnings before taxes $2,720 Taxes (1,088) Net income $1,320 1,632 Common dividends (712.8) (712.8) $919.2 Addition to retained earnings $607.2 Earnings per share $66 $81.6 $35.64 $35.64 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 forecasted increase in net sales is 20%. Spontaneously generated funds will sufficiently cover any financing needs. 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. The cost of sales percentage for Black Sheep Broadcasting Company will decrease due to economies of scale. No excess capacity currently exists. If Black Sheep Broadcasting Company 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 III Just II O I, II, and III O I and II O II and III O I only