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0 Assignment - Financial St X y {:4 MindTap - Cengage Lea' X \_'\ " e X (- C IE)

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0 Assignment - Financial St X y {:4 MindTap - Cengage Lea‘ X \_'\ " e — X (- C IE) ng.cengsge.com;’stallc,fnb/ul/indexhtml?nbld=YSD4228-LnbNodeld=3023292?4&dep|oymentld=47380218546375371456621333038teISEN=973‘l285779454#!&parentld=3023... fl fil a Apps {3 school a: KeyBankOnllne o MyAccounquutm a Google B CLUE WYNDHAM-F fl Course Hero 3 Simplil’yCalculator o Transtulors Q graph calculator fl Solution Inn » ,- . MINDTAP 0 James Miller v G) u. chw Assignment - Financial Statements, Cash Flow. and Taxes ® .
9 Cold Goose Metal Worm lnc.'s income statement reporls data for ils first year of operation. The flrrn's CEO would like sales to increase by 25% next year. s 1. Cold Goose is able to achieve this level of' increased sales, but its interest costs increase from 10% to 15% of earnings before interest and
taxes (EEIT). 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. s e 3. The company’s tax rate remalns constant at 40% of its pre-tax income or earnings before taxes (EST). 4. In Year 2, Cold Goose expects to pay $100,000 and $1,419,075 of preferred and common stock dividends, respectively. Complete the Year 2 income statement data for Cold Goose, then answer the questions that follow. Be sure to round each dollar value to the nearest whole
dollar. Lb‘ Cold Goose Metal Works Inc.
Income Statement for Year Ending December 31 Year 1
Year 1 (Forecasbed) _
Net sales $20,000,000 :13
Less: Operatlng costs, except depreciation and amortization 13,000,000 .
Less: Depreciation and amorfizatlon expenses 000,000 000,000
Operating income (or EBlT) $6,200,000
Less: Interest expense 620,000 Pre-tax income {or EBT) 5,580,000 v

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0 Assignment - Financial St X y {:4 MindTap - Cengage Lea‘ X \_'\ " e — X (- C I G) ng.cengagecomfstallcfnb/ul/indexhtmi?nbld=YSD4228-LnbNodeid=3023292?4&dep|oymentld=47380218546375371456621333038teISEN=973‘l285779454#!&parentld=3023.“ fl fil a E
Apps {3 school a: KeyBankOrlilne 0 My Account |5outh-.« a Google B CLUE WYNDHAM + u Course Hero 3 Simplify Calculator 0 Transtutors Q graph calculator fl Solution Inn »
,-__. mg» 0 James Miller . 6)
Assignment - Financial Statements, Cash Flow, and Taxes ®
e 0
Cold Goose Metal Works Inc. !
Income Statement for Year Ending December 31
Year 2.
Year 1 {Forecasted}
Net sales $20,000,000
Less: Operating costs, except depreciation and amortization 13,000,000
Less: Depreciation and amortization expenses 800,000 800,000
Operating income (or E81T) $6,200,000
Less: Interest expense 620,000
Pre-tax income {or EBT) 5,580,000 ’
Less: Taxes (40%) 2,232,000
Earnings afier taxes $3,348,000 6
Less: Preferred stock dividends 100,000
Earnings available to common shareholders 3,243,000 —=
Less: Common stock dividends 1,171,300
Contribution to retained earnings $2,076,200 $2,535,425 "2
r5 Given the results of the previous income statement calculations, complete the following statements: - In Year 2, if Cold Goose has 10,000 shares of preferred stock imued and outstanding, then each preferred share should expect to receive
in annual dividends. ‘

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