This Year’s Actual Results Next Year’s Initial Forecast Net sales $17,000,000 $20,060,000 Cost of goods sold 13,600,000 16,048,000 Gross profit $3,400,000 $4,012,000 Fixed operating costs except...


























































































This Year’s Actual Results


Next Year’s Initial Forecast

Net sales$17,000,000$20,060,000
Cost of goods sold13,600,00016,048,000
Gross profit$3,400,000$4,012,000
Fixed operating costs except depreciation850,000850,000
Depreciation340,000401,200
Earnings before interest and taxes$2,210,000$2,607,800
Interest340,000340,000
Earnings before taxes$1,870,000$2,267,800
Taxes748,000907,120
Net income$1,122,0001,360,680
Common dividends605,880605,880
Addition to retained earnings$516,120$754,800
Earnings per share$0.22$0.27
Dividends per share$0.12$0.12
Number of common shares (millions)5.005.00






Which of the following are assumptions made by the initial income statement forecast? Check all that apply.




The forecasted increase in net sales is 18.00%.






No additional external financing will be required.






The assigned depreciation method has changed.






The facility is not currently operating at full capacity.






The facility is currently operating at full capacity.












Which of the following could be a direct cause of financing feedback? Check all that apply.




Borrowing from the bank






Purchasing additional buildings with internally generated funds






Repaying outstanding bonds






Issuing additional common stock










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






Reduce the level of cash on hand






Increase charges against net income, reducing the amount of available internally generated funds






Increase the length of the operating cycle






Jun 05, 2022
SOLUTION.PDF

Get Answer To This Question

Related Questions & Answers

More Questions »

Submit New Assignment

Copy and Paste Your Assignment Here