sults of the previous income statement calculations, complete the following statements: In Year 2, if Cute Camel has 5,000 shares of preferred stock issued and outstanding, then each preferred share should expect to receive in annual dividends. If Cute Camel has 400,000 shares of common stock issued and outstanding, then the firm's earnings per share (EPS) is expected to change from in Year 1 to in Year 2. Cute Camel's earnings before interest, taxes, depreciation and amortization (EBITDA) value changed from in Year 2. It is in Year 1 to to say that Cute Camel's net inflows and outflows of cash at the end of Years 1 and 2 are equal to the company's annual contribution to retained earnings, $1,479,500 and $1,822,062, respectively. This is because of the items reported in the income. statement involve payments and receipts of cash.
sults of the previous income statement calculations, complete the following statements: In Year 2, if Cute Camel has 5,000 shares of preferred stock issued and outstanding, then each preferred share should expect to receive in annual dividends. If Cute Camel has 400,000 shares of common stock issued and outstanding, then the firm's earnings per share (EPS) is expected to change from in Year 1 to in Year 2. Cute Camel's earnings before interest, taxes, depreciation and amortization (EBITDA) value changed from in Year 2. It is in Year 1 to to say that Cute Camel's net inflows and outflows of cash at the end of Years 1 and 2 are equal to the company's annual contribution to retained earnings, $1,479,500 and $1,822,062, respectively. This is because of the items reported in the income. statement involve payments and receipts of cash.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Transcribed Image Text:Ch 03- Chapter Problems
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 70% of net sales, and its depreciation and
amortization expenses remain constant from year to year.
3. The company's tax rate remains constant at 25% of its pre-tax income or earnings before taxes (EBT).
4. In Year 2, Cute Camel expects to pay $100,000 and $1,281,375 of preferred and common stock dividends, respectively.
Complete the Year 2 income statement data for Cute Camel, then answer the questions that follow. Be sure to round each dollar value to the nearest
whole dollar.
Net sales
Less: Operating costs, except depreciation and amortization
Less: Depreciation and amortization expenses
Operating income (or EBIT)
Less: Interest expense
Pre-tax income (or EBT)
Less: Taxes (25%)
Earnings after taxes
Less: Preferred stock dividends
Earnings available to common shareholders
Less: Common stock dividends
Contribution to retained earnings
Cute Camel Woodcraft Company
Income Statement for Year Ending December 31
Year 1
$15,000,000
10,500,000
600,000
$3,900,000
390,000
3,510,000
877,500
$2,632,500
100,000
2,532,500
1,053,000
$1,479,500
Year 2 (Forecasted)
$
600,000
$
$
$1,822,062
Transcribed Image Text:Given the results of the previous income statement calculations, complete the following statements:
• In Year 2, if Cute Camel has 5,000 shares of preferred stock issued and outstanding, then each preferred share should expect to receive
in annual dividends.
• If Cute Camel has 400,000 shares of common stock issued and outstanding, then the firm's earnings per share (EPS) is expected to change from
in Year 1 to
in Year 2.
• Cute Camel's earnings before interest, taxes, depreciation and amortization (EBITDA) value changed from
in Year 2.
in Year 1 to
. It is
to say that Cute Camel's net inflows and outflows of cash at the end of Years 1 and 2 are equal to the company's annual
contribution to retained earnings, $1,479,500 and $1,822,062, respectively. This is because
of the items reported in the income
statement involve payments and receipts of cash.
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