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.

6. Projected financial statements and basic analysis Aa Aa E You are the most creative analyst for Black Sheep Broadcasting Company, and your admirers want to see you work your analytical magic once more. 2016 Actual Results 2017 Initial Forecast Dividends per share Depreciation Earnings before interest and taxes Gross profit Addition to retained earnings Common dividends Cost of goods sold Fixed operating costs except depreciation Earnings per share Earnings before taxes Number of common shares (millions) Net income Net sales Interest Taxes $36 (400) $2,600 $4,000 $607 (713) (16,000) (1,000) $66 $2,200 20.0 $1,320 $20,000 (400) (880) $36 (440) $2,860 $4,400 $763 (713) (17,600) (1,100) $74 $2,460 20.0 1,476 $22,000 (400) (984) Which of the following are assumptions made by the initial income statement forecast? Check all that apply. The assigned depreciation method has changed. O The facility is currently operating at full capacity. O No additional external financing will be required. The forecasted increase in net sales is 10%. Additional external financing will be required by Black Sheep Broadcasting Company O The facility is not currently operating at full capacity. 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 O O O O O O Just II Just III I, II, and III I only I and II II and