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Attempts: Keep the Highest: 17 4. Income statement The income statement, also known as the profit and loss statement, helps calculate the firm's net incorme that is available to shareholders. The income statement is usually prepared using the International Financial Reporting Standards (IFRS), which match revenues and expenses to the period in which they were incurred, not necessarily when cash was received or paid. The following is the income statement of Universal Chemical Corp. in its first year of operation: Universal Chemical Corp. Income Statement For the Year Ending on December 31 (Millions of dollars) Year 1 $5,000 4,000 200 4,200 800 Net sales Operating costs, except depreciation and amortization Depreciation and amortization Total operating costs Operating income (or EBIT) Less: Interest Earnings before taxes (EBT) Less: Taxes (40%) Net income available to shareholders 80 720 288 432 The firm's CEO would like sales to increase by 2S% next year. Assume that (1) the operating costs (exdding depreciation and amortization) remain at 80% of sales, (2) depreciation and amortization remain at 4% of sales, and (3) the interest cost increases from 10% to 15% of earnings before interest and taxes (EBIT). The tax rate of also remains the same. What will be the company's operating income in the second year? Oifferent companies have different debt-related expenses, depreciation, amortization, and other write-offs. Changes in any of these expenses will have an impact on the company's income statement. Considering that the following changes occur while everything else remains the same, which statenents are true? Check all that apply. An increase in earnings before taxes wil lead to an increase in net income. Anincrease in total operating costs wil lead to an increase in the net ncome