(Solved): The income statement, also known as the profit and loss (PEL) statement, provides a snapshot of the ...

The income statement, also known as the profit and loss (PEL) statement, provides a snapshot of the financial performance of a company during a specified period of time. It reports a firm's gross income, expenses, net income, and the income that is avaliable for distribution to its preferred and common shareholders. The income statement is prepared using the generally accepted accounting principles (GAAP) that match the firm's revenues and expenses to the period in which they were incurred, not necessarily when cash was recelved or paid. Investors and analysts use the information given in the income statement and other financial statements and reports to evaluate the company's financial performance and condition. Consider the following scenario: Cold Goose Metal Works incis income statement reports data for its first year of operation. The firm's cEO would like sales to increase by \( 25 \% \) next year. 1. Cold Goose is able to achieve this level of increased sales, but its interest costs increase from \( 10 \% \) to \( 15 \% \) of eamings before interest and taxes (EBIT). 2. The company's operating costs (excluqing depreciation and amorvzabion) remain at.75\% of net sales, and its depreciation and amortization expenses remain constant from year to vear 3. The company's tax rate remains constant at \( 25 \% \) of its are -tax income or earnings before taxes (Con). 4. In Year 2, Cold Goose expects to pay \( \$ 100,000 \) and \( \$ 1,172,601 \) of preferred and common wock dividends, reipectively. Complete the Year 2 income statement data for Cold Coose, then answer the gueptions that follow, Be sure to found each dollar yalue to thic nirarest. whole dollar. Cold Goose Metal Works Inc. FFren the retadte of the orevieus income statement caiculations, coenpiete the following stotements? In anhust dividends. Given the results of the previous income statement calculations, complete the following statements: In Year 2, if Cold Goose has 25,000 shares of preferred stock issued and outstanding, then each preferred share should expect to receive in annyal dividends. - If Cold Goose has 200,000 shares of common stock issued and outstanding. then the firm's earnings per ashare (EPs) is expected to change from. in Year 1 to in Year 2. - Cold Goose's earnings before interest, taxes, depreciation and amortization (E8IrDA) value changed from in Year 2. - It is to fray that Cold Goose's net inflows and outflows of cash at the end of Years 1 and 2 are equal to the company's annual conthibution to retained earning5, 5869,437 and \( 51,133,180 \), respectively, This is because. taternent uvolve payments and receipts of cash.