70.2K

Verified Solution

Link Copied!

You are the most creative analyst for Avatar Animators Inc., and your admirers want to see you work your analytical magic once more 2016 Actual Results 2017 Initial Forecast Net Sales $17.000 $22,100 Cost of goods sold (13,600) (17,680) Gross profil $3,400 $4,420 Fleed operating costs except depreciation (850) (1,105) Depreciation (340) (442) Earnings before interest and taxes $2,210 $2,823 Interest (340) (340) Eamins before taxes $1,870 $2.533 Taxes (748) (1,013.2) Net Income $1,122 1,519.8 Common dividends (605.88) (605.88) Addition to retained earnings $516.12 $913.92 Earnings per share $56.1 $75.90 Dividends per share $30.294 $30.294 Number of common shares (milions) 20.0 20.0 Which of the following are assumptions made by the initial income statement forecast? Check all that apply. The assigned depreciation method has changed. The facility is not currently operating at full capacity No additional internal financing will be required. The facility is currently operating at Pull capacky The forecasted increase in net sales is 30%. Additional external financing will be required by Avatar Animators Inc. Which of the following could be a direct cause of financing feedback? 1. Issuing additional common stock IL. Purchasing additional buildings with internally generated funds In. An unexpected increase in sales IV. Borrowing from the bank O and IV O IV On and IV O in 01 O II O and I O II and 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 O reduce the level of cash on hand. O increase the length of the operating cycle. O spontaneously increase liabilities associated with the cost of goods sold. increase charges against net income, reducing the amount of available intemally generated funds

Answer & Explanation Solved by verified expert

See Answer