You are the most creative analyst for Avatar Animators Inc., and your admirers want to see you work your analytical magic once mor 2016 Actual Results Net sales $16,000 Cost of goods sold (12,800) Gross profit $3,200 Fixed operating costs except depreciation (800) Depreciation (320) Earnings before interest and taxes $2,080 Interest (320) Earnings before taxes $1,760 Taxes (704) Net income $1,056 Common dividends (570.24) Addition to retained earnings $485.76 Earnings per share $52.8 Dividends per share $28.512 Number of common shares (millions) 20.0 2017 Initial Forecast $19,200 (15,360) $3,840 (960) (384) $2,496 (320) $2,176 (870.4) 1,305.6 (570.24) $735.36 $65.28 $28.512 20.0 Which of the following are assumptions made by the initial income statement forecast? Check all that apply The facility is not currently operating at full capacity No additional external financing will be required. The facility is currently operating at full capacity The forecasted increase in net sales is 20%. The assigned depreciation method has changed. Additional external financing will be required by Avatar Animators Inc. If Avatar Animators Inc. 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 11. Borrowing from a bank using notes payable III. Issuing long-term bonds Just II II and III Just 11 I only O 1, 11, and I The forecasted increase in net sales is 20%. The assigned depreciation method has changed Additional external financing will be required by Avatar Animators Inc. If Avatar Animators Inc. 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? 1. Issuing additional common stock 11. Borrowing from a bank using notes payable TII. Issuing long-term bonds Just 111 O II and III O Just II I only O I, II, and I I and