Payments and Receipts of Cash Assignment – Top Universities

– 25, 10, 20, 15

– 3.69, 7.2, 6.48, 3.89 TO 9.2, 7.82, 4.49, 4.69

– 4,896,000, 4,000,000, 5,544,000, 9,600,000 TO 6,946,000, 9,846,000, 13,190,000, 5,000,000

– correct/ incorrect AND all/ all but one

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 (EBIT)

2. The company's operating costs (excluding depreciation and amortization) remain at 60% of net sales, and its depreciation and amortization expenses remain constant from year to year.

3. The company's tax rate remains constant at 40% of its pre-tax income or earnings before taxes (EBT)

4. In Year 2, Cold Goose expects to pay $100,000 and $821,100 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 Cold Goose Metal Works Inc. Income Statement for Year

Ending December 31 Year 2 Year 1 (Forecasted) Net sales $10,000,000 Less: Operating costs, except depreciation and amortization 6,000,000 Less: Depreciation and amortization expenses 400,000 400,000 Operating income (or EBIT) $3,600,000 Less: Interest expense 360,000 Pre-tax income (or EBT) 3,240,000 Less: Taxes (40%) 1,296,000 Earnings after taxes $1,944,000 Less: Preferred stock dividends 100,000 Earnings available to common shareholders 1,844,000

Less: Common stock dividends 680,400 Contribution to retained earnings $1,163,600 $1,424,900 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 issued and outstanding, then each preferred share should expect to receive in annual dividends. If Cold Goose has 500,000 shares of common stock issued and outstanding, then the firm's earnings per share (EPS) expected to change from in Year 2. in Year 1 to Cold Goose's before interest, taxes, depreciation and amortization (EBITDA) value changed from in Year 1 to in Year 2 It is to say that Cold Goose's net inflows and outflows of cash at the end of Years 1 and are equal to the company's annual contribution to retained earnings, $1,163,600 and $1,424,900, respectively. This is because of the item reported in the income statement involve payments and receipts of cash.