MindTap Cengage L Secure https d 551651290921900288812974548kelS8N-9781305635975
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MindTap Cengage L Secure https d 551651290921900288812974548kelS8N-97813056359758snapshotld-93888 MINDTAP Assignment 03-Financial Statements, Cash Flow, and Taxes Back to Assignment Attempts: 3. Income statement a Search this course El Keep the Highest: 5/17 Aa The income statement, also known as the profit and loss (PBL) statement, provides a snapshot of the financial specified period of time. I common shareholders performance of a company during a it reports a firm's gross income, expenses, net income, and the income that is available for distribution to its preferred and The income statement is prepared using the generally accepted accounting principies (GAP) that match the frm's revenues and esxpenses to the periad in The income statement is prepared using the other financial statements and reports to evaluate the company's financial performance and condition. Consider the following scenario: s revenues and expenses to the period in and analysts use the information given in the income statement and not necessarily when cash was received or paid. Investors Green Caterpillar Garden Supplies Inc.'s income statement reports data for its first year of operation. The next year this level of increased sales, but its Interest costs increase from 10% to 15% of earnings before interest and taxes (EBIT operating costs (excluding depreciation and amortization) remain at 80% of net sales, and its depreciation and anotaton expenses remain constant from year to year. 3. The company's tax rate remars constant at 40% of its pre-tax income or earnings before taxes (EBT) 4 In Year 2, Green Caterpillar expects to pay $300,000 and $722,925 of preferred and common stock dvidends, respectively Complete the Year 2 income statement data for Green Caterpillar, then answer the questions that follow whole dolar Be sure to round each dollar value to the nearest Green Caterpillar Garden Supplies Inc. Income Statement for Year Ending December 31 Year 2 Year 1 Net sales Less: Operating costs, except depreciation and amortization Less: Depreciation and amortization expenses $15,000,000 12,000,000 600,000 600,000 Operating income (or EBIT) Less: Interest expense 240,000Explanation / Answer
Answer)
Detail of Income statement for 2 year as below,
Answer a) annual dividend for preferred share = 300000/25000 = $ 12 /share
Answer b) EPS = Earning for common share / number of common share.
From $ 4.98 in 1 year to $ 6.53 in 2 year
Answer c)EBITDA
$ 3000,000 in 1 year to $ 3,750,000 in 2 year
Answer d) Justifiable
dividend
Year 1 Year 2 Net sales $15,000,000 $18,750,000 Less operating cost less depreciation and amortisation $12,000,000 $15,000,000 EBITDA $3,000,000 $3,750,000 Less Depreciation and amortization $600,000 $600,000 EBIT $2,400,000 $3,150,000 Less Interest expanses $240,000 $472,500 EBT $2,160,000 $2,677,500 Less Tax (40%) $864,000 $1,071,000 Earning after tax $1,296,000 $1,606,500 Less preffered stock dividend $300,000 $300,000 Earning for common share holders $996,000 $1,306,500 Less Common stock dividend $583,200 $722,925 Retained earning $412,800 $583,575 EPS $4.98 $6.53