Question: how to solve? You are the most creative analyst for Blue Lemon Pharmaceutical Company, and your admirers want to see you work your analytical magic


You are the most creative analyst for Blue Lemon Pharmaceutical 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 Earnings before interest and taxes Interest Earnings before taxes Taxes Net Income Common dividends Addition to retained earnings Earnings per share Dividends per share Number of common shares (millions) This Year's Actual Results Next Year's Initial Forecast $18,000,000 $19,440,000 14,400,000 15,552,000 $3,600,000 $3,888,000 900,000 900,000 360,000 388,800 $2,340,000 $2,527,200 360,000 360,000 $1,980,000 $2,167,200 792,000 366,880 $1,180,000 $1,300,320 641,520 641,520 $546,480 $658,800 $0.24 30.26 $0.13 $0.13 5.00 5.00 Which of the following are assumptions made by the initial income statement forecast? Check all that apply. The assigned depreciation method has changed. The facility is currently operating at full capacity The forecasted increase in net sales is 8.00%. Additional external financing will be required by Blue Lemon Pharmaceutical Company. The facility is not currently operating at full capacity. Which of the following could be a direct cause of financing feedback? Check all that apply. Repaying notes payable Borrowing from the bank Issuing additional common stock An unexpected increase in sales 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: Spontaneously increase liabilities associated with the cost of goods sold Increase charges against net income, reducing the amount of available internally generated funds O Increase the length of the operating cycle Reduce the level of cash on hand
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