This Year’s Actual Results Next Year’s Initial Forecast Net sales $17,000,000 $20,060,000 Cost of goods sold 13,600,000 16,048,000 Gross profit $3,400,000 $4,012,000 Fixed operating costs except depreciation 850,000 850,000 Depreciation 340,000 401,200 Earnings before interest and taxes $2,210,000 $2,607,800 Interest 340,000 340,000 Earnings before taxes $1,870,000 $2,267,800 Taxes 748,000 907,120 Net income $1,122,000 1,360,680 Common dividends 605,880 605,880 Addition to retained earnings $516,120 $754,800 Earnings per share $0.22 $0.27 Dividends per share $0.12 $0.12 Number of common shares (millions) 5.00 5.00 Which of the following are assumptions made by the initial income statement forecast? Check all that apply. The forecasted increase in net sales is 18.00%. No additional external financing will be required. The assigned depreciation method has changed. The facility is not currently operating at full capacity. The facility is currently operating at full capacity. Which of the following could be a direct cause of financing feedback? Check all that apply. Borrowing from the bank Purchasing additional buildings with internally generated funds Repaying outstanding bonds Issuing additional common stock 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: Spontaneously increase liabilities associated with the cost of goods sold Reduce the level of cash on hand Increase charges against net income, reducing the amount of available internally generated funds Increase the length of the operating cycle
This Year’s Actual Results Next Year’s Initial Forecast Net sales $17,000,000 $20,060,000 Cost of goods sold 13,600,000 16,048,000 Gross profit $3,400,000 $4,012,000 Fixed operating costs except depreciation 850,000 850,000 Depreciation 340,000 401,200 Earnings before interest and taxes $2,210,000 $2,607,800 Interest 340,000 340,000 Earnings before taxes $1,870,000 $2,267,800 Taxes 748,000 907,120 Net income $1,122,000 1,360,680 Common dividends 605,880 605,880 Addition to retained earnings $516,120 $754,800 Earnings per share $0.22 $0.27 Dividends per share $0.12 $0.12 Number of common shares (millions) 5.00 5.00 Which of the following are assumptions made by the initial income statement forecast? Check all that apply. The forecasted increase in net sales is 18.00%. No additional external financing will be required. The assigned depreciation method has changed. The facility is not currently operating at full capacity. The facility is currently operating at full capacity. Which of the following could be a direct cause of financing feedback? Check all that apply. Borrowing from the bank Purchasing additional buildings with internally generated funds Repaying outstanding bonds Issuing additional common stock 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: Spontaneously increase liabilities associated with the cost of goods sold Reduce the level of cash on hand Increase charges against net income, reducing the amount of available internally generated funds Increase the length of the operating cycle
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
Related questions
Question
|
This Year’s Actual Results
|
Next Year’s Initial
|
|
|---|---|---|
| Net sales | $17,000,000 | $20,060,000 |
| Cost of goods sold | 13,600,000 | 16,048,000 |
| Gross profit | $3,400,000 | $4,012,000 |
| Fixed operating costs except |
850,000 | 850,000 |
| Depreciation | 340,000 | 401,200 |
| Earnings before interest and taxes | $2,210,000 | $2,607,800 |
| Interest | 340,000 | 340,000 |
| Earnings before taxes | $1,870,000 | $2,267,800 |
| Taxes | 748,000 | 907,120 |
| Net income | $1,122,000 | 1,360,680 |
| Common dividends | 605,880 | 605,880 |
| Addition to |
$516,120 | $754,800 |
| Earnings per share | $0.22 | $0.27 |
| Dividends per share | $0.12 | $0.12 |
| Number of common shares (millions) | 5.00 | 5.00 |
Which of the following are assumptions made by the initial income statement forecast? Check all that apply.
The forecasted increase in net sales is 18.00%.
No additional external financing will be required.
The assigned depreciation method has changed.
The facility is not currently operating at full capacity.
The facility is currently operating at full capacity.
Which of the following could be a direct cause of financing feedback? Check all that apply.
Borrowing from the bank
Purchasing additional buildings with internally generated funds
Repaying outstanding bonds
Issuing additional common stock
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:
Spontaneously increase liabilities associated with the cost of goods sold
Reduce the level of cash on hand
Increase charges against net income, reducing the amount of available internally generated funds
Increase the length of the operating cycle
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