mapter 2 Assignment Puzzy Button Clothing Company Income Statement for Year Ending December 31 Year 1 Year 2 (Forecasted) Net sales Less: Operating costs, except depreciation and amortization Less: Depreciation and amortization expenses Operating income (or EBIT) $25,000,000 18,750,000 1,000,000 $5,250,000 525,000 1,000,000 $4,725,000 1,890,000 Less: Interest expense Pre-tax income (or EBT) Less: Taxes (40%) Earnings after taxes Less: Preferred stock dividends Earings available to common shareholders Less: Common stock dividends Contribution to retained earnings $2,835,000 100,000 $2,735,000 1,134,000 $1,345,250 $1,984,625 Given the results of the previous Income statement calculations, complete the following statements: In Year 2, if Fuzzy Button has 5,000 shares of preferred stock issued and outstanding, then each preferred share should expect to receive in annual dividends. If Fuzzy Button has 400,000 shares of common stock inued and outstanding, then the firm's earnings per share (EPS) is expected to change from in Year 1 to - In Year 2. Fuzzy Button's before interest, taxes, depreciation and amortization (EBITDA) value changed from In Year 1 to In Year 2 It is to say that Fuzzy Button'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, 51,345,250 and $1,984,625, respectively. This is because of the items reported in the income statement involve payments and receipts of cash Grade Now Save & Continue