Question

Cute Camel Woodcraft company's income statement reports data for its first year of operation. The firms CEO would like sales to increase by 25% next year.

3. Income statement Aa Aa E The income statement, also known as the profit and loss (P&L) statement, provides a snapshot of the financial performance of a company during a specified period of time. It reports a firm's gross income, expenses, net income, and the income that is available for distribution to its preferred and common shareholders. The income statement is prepared using the generally accepted accounting principles (GAAP) that match the firm's revenues and expenses to the period in which they were incurred, not necessarily when cash was received or paid. Investors and analysts use the information given in the income statement and other financial statements and reports to evaluate the company's financial performance and condition. Consider the following scenario: Cute Camel Woodcraft Company's income statement reports data for its first year of operation. The firm's CEO would like sales to increase by 25% next year. 1. Cute Camel is able to achieve this level of increased sales, but its interest costs increase from 10% to 15% of earnings before interest and taxes (EBIT). 2. The company's operating costs (excluding depreciation and amortization) remain at 65% of net sales, and its depreciation and amortization expenses remain constant from year to year. 3. The company's tax rate remains constant at 40% of its pre-tax income or earnings before taxes (EBT). 4. In Year 2, Cute Camel expects to pay $300,000 and $1,824,525 of preferred and common stock dividends, respectively.

Given the results of the previous income statement calculations, complete the following statement.

Question 1 available drop down answers. $30.00, $18.00, $12.00, $24.00

Question 2 available drop down answers, first blank. $16.74, $27.90, $31.00, $15.24. Second Blank. $18.77, $39.75, $20.27, $33.79

Question 3 available drop down answers, first blank. $9,548,000. $8,432,000. $19,200,000. $7,000,000 Second Blank. $8,750,000. $12,004,500. $20,304,500. $26,192,500.

Question 4 available drop down answers, first blank. Incorrect or correct. Second Blank. All but one or all.

Answer 1

	net sales	20000000		25000000
	less operating cost= 1300000/2000000 =65%	13000000		16250000
	less depreciation	800000		800000
	operating income	6200000		7950000
	interest expense	620000		620000
	pre tax income	5580000		7330000
	tax-40%	2232000		2932000
	after tax income	3348000		4398000
	less preferred stock dividend	300000		300000
	earning available to common stock holders	3048000		4098000
	common stock dividend	1506600		1824525
	contribution to retained earnings	1541400		2273475
1-	each preferred stock shoult expect to receive annual dividend	300000/25000	12
		Year 1	Year 2
2-	EPS = earning available to common stock holders/no of common stock outstanding	15.24	20.49
	earning available to common stock holders	3048000	4098000
	common stock outstanding	200000	200000
	change from 15.24 in year 1 to 20.49 in year 2
3-		Year 1	Year 2
	EBIT	6200000	7950000
	depreciation	800000	800000
	EBItDA	7000000	8750000
	change from 7000000 in year 1 to 8750000 in year 2
4-	(1) incorrect to say	(2) all but one