Attempts 3. Income statement ools Average/2 The income statement, also known as the profit and loss (P&L) statement, provides a snapshot of the financial performance of a company during a specified period of time. It reports a firm's gross income, expenses, net income, and the income that is available for distribution to its preferred and common shareholders. The income statement is prepared using the generally accepted accounting principles (GAAP) that match the firm's revenues and expenses to the period in which they were incurred, not necessarily when cash was received or paid. Investors and analysts use the information given in the income statement and other financial statements and reports to evaluate the company's financial performance and condition. Consider the following scenario: Cute Camel Woodcraft Company's income statement reports data for its first year of operation. The firm's CEO would like sales to increase by 25% next year. 1. Cute Camel is able to achieve this level of increased sales, but its interest costs increase from 10% to 15% of earnings before interest and taxes (EBIT). 2. The company's operating costs (excluding depreciation and amortization) remain at 70% of net sales, and its depreciation and amortization expenses remain constant from year to year. 3. The company's tax rate remains constant at 25% of its pre-tax income or earnings before taxes (EBT). 4. In Year 2, Cute Camel expects to pay $100,000 and $1,281,375 of preferred and common stock dividends, respectively. Complete the Year 2 income statement data for Cute Camel, then answer the questions that follow. Be sure to round each dollar value to the nearest whole dollar. Net sales Less: Operating costs, except depreciation and amortization Less: Depreciation and amortization expenses Operating income (or EBIT) Less: Interest expense Pre-tax income (or EBT) Less: Taxes (25%) Earnings after taxes Cute Camel Woodcraft Company Income Statement for Year Ending December 31 Year 1 $15,000,000 10,500,000 Year 2 (Forecasted). 600,000 600,000 $ $3,900,000 390,000 3,510,000 877,500 $2,632,500 Less: Preferred stock dividends 100,000 Earnings available to common shareholders 2,532,500 Less: Common stock dividends 1,053,000 Contribution to retained earnings $1,479,500 $1,822,062 Given the results of the previous income statement calculations, complete the following statements: In Year 2, if Cute Camel has 5,000 shares of preferred stock issued and outstanding, then each preferred share should expect to receive in annual dividends. If Cute Camel has 400,000 shares of common stock issued and outstanding, then the firm's earnings per share (EPS) is expected to change from in Year 1 to in Year 2. Cute Camel's earnings before interest, taxes, depreciation and amortization (EBITDA) value changed from . It is in Year 2. in Year 1 to to say that Cute Camel's net inflows and outflows of cash at the end of Years 1 and 2 are equal to the company's annual contribution to retained earnings, $1,479,500 and $1,822,062, respectively. This is because of the items reported in the income statement involve payments and receipts of cash. Given the results of the previous income statement calculations, complete the following statements: In Year 2, if Cute Camel has 5,000 shares of preferred stock issued and outstanding, then each preferred share should expect to receive in annual dividends. $30.00 mel has 400,000 shares of common stock issued and outstanding, then the firm's earnings per share (EPS) is expected to change from in Year 2. in Year 1 to $20.00's earnings before interest, taxes, depreciation and amortization (EBITDA) value changed from $50.00 in Year 2. in Year 1 to of the items reported in the income to say that Cute Camel's net inflows and outflows of cash at the end of Years 1 and 2 are equal to the company's annual $40.00 n to retained earnings, $1,479,500 and $1,822,062, respectively. This is because statement involve payments and receipts of cash. Grade It Now Save & Continue Continue without saving $1,479,500 $1,822,062 $7.76 Given the results of the prev $10.68 he statement calculations, complete the following statements: In Year 2, if Cute Camel h $8.01 hares of preferred stock issued and outstanding, then each preferred share should expect to receive In annual d $12.56 If Cute Camel has 400,000 in Year 1 to common stock issued and outstanding, then the firm's earnings per share (EPS) is expected to change from in Year 2. Cute Camel's earnings before interest, taxes, depreciation and amortization (EBITDA) value changed from in Year 1 to in Year 2. It is to say that Cute Camel's net inflows and outflows of cash at the end of Years 1 and 2 are equal to the company's annual contribution to retained earnings, $1,479,500 and $1,822,062, respectively. This is because of the items reported in the income " statement involve payments and receipts of cash. Grade It Now Save & Continue Continue without saving Given the results of the previous income statement calculations, complete the following statements: $4,500,000 In Year 2, if Cute Camel has 5,000 shares of preferred stock issued and outstanding, then each preferred s $14,400,000 ect to receive in annual dividends. If Cute Camel has 400,000 shares of common stock issued and outstanding, then the firm's earnings per sh In Year 2.1 in Year 1 to 1 Cute Camel's earnings before interest, taxes, depreciation and amortization (EBITDA) value changed from $4,777,500 $6,532,500 pected to change from in Year 1 to in Year 2. to say that Cute Camel's net inflows and outflows of cash at the end of Years 1 and 2 are equal to the company's annual of the items reported in the income It is contribution to retained earnings, $1,479,500 and $1,822,062, respectively. This is because statement involve payments and receipts of cash. Grade It Now Save & Continue Continue without saving Given the results of the previous income statement calculations, complete the following statements: $19,503,750 $16,328,437 Camel has 5,000 shares of preferred stock issued and outstanding, then each preferred share should expect to receive annual dividends. $8,228,437 s 400,000 shares of common stock issued and outstanding, then the firm's earnings per share (EPS) is expected to change from In Year 2. $5,625,000 It is Year 1 to nings before interest, taxes, depreciation and amortization (EBITDA) value changed from in Year 2. in Year 1 to to say that Cute Camel's net inflows and outflows of cash at the end of Years 1 and 2 are equal to the company's annual contribution to retained earnings, $1,479,500 and $1,822,062, respectively. This is because of the items reported in the income statement involve payments and receipts of cash. In Year 2, if Cute Camel has 5,000 shares of preferred stock issued and outstanding, then each preferred share should expect to receive in annual dividends. If Cute Camel has 400,000 shares of common stock issued and outstanding, then the firm's earnings per share (EPS) is expected to change from incorrect ear 1 to Cute correct It is in Year 2. nings before interest, taxes, depreciation and amortization (EBITDA) value changed from in Year 2. in Year 1 to to say that Cute Camel's net inflows and outflows of cash at the end of Years 1 and 2 are equal to the company's annual contribution to retained earnings, $1,479,500 and $1,822,062, respectively. This is because) of the items reported in the income statement involve payments and receipts of cash. Gondall Mou Save & Continue In Year 2, if Cute Camel has 5,000 shares of preferred stock issued and outstanding, then each preferred share should expect to receive in annual dividends. If Cute Camel has 400,000 shares of common stock issued and outstanding, then the firm's earnings per share (EPS) is expected to change from in Year 1 to In Year 2. Cute Camel's earnings before interest, taxes, depreciation and amortization (EBITDA) value all but one It is In Year 2. to say that Cute Camel's net inflows and outflows of cash at the end of " contribution to retained earnings, $1,479,500 and $1,822,062, respectively. This is because statement involve payments and receipts of cash in Year 1 to all are equal to the company's annual of the items reported in the income