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6. Projected financial statements and basic analysis You are the most creative analyst for Green Rabbit Transportation Inc., and your admirers want to see you work your analytical magic once more. 2017 Initial Forecast 2016 Actual Results $18,000 Net sales Cost of goods sold Gross profit Fixed operating costs except depreciation Depreciation Earnings before interest and taxes Interest Earnings before taxes Taxes (14,400) $3,600 (900) (360) $23,400 (18,720) $4,680 (1,170) (468) $3,042 (360) $2,340 = (360) $1,980 Net Income (792) $1,188 (641.52) $546.48 $2,682 (1,072.8) 1,609.2 (641.52) $967.68 Common dividends Addition to retained earnings Earnings per share Dividends per share Number of common shares (millions) $59.4 $80.46 $32.076 $32.076 20.0 20.0 Ch 09: Assignment Corporate Valuation and Financial Planning 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 assigned depreciation method has changed. Additional external financing will be required by Green Rabbit Transportation Inc. The forecasted increase in net sales is 30%. Ch 09: Assignment - Corporate Valuation and Financial Planning Which of the following could be a direct cause of financing feedback? 1. Issuing additional common stock 11. Purchasing additional buildings with internally generated funds III. An unexpected increase in sales IV. Borrowing from the bank O! II and IV III and IV O II I and 11 I and IV IV 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 reduce the level of cash on hand. Increase the length of the operating cycle increase charges against net income, reducing the amount of available internally generated funds. spontaneously increase liabilities associated with the cost of goods sold

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