(Solved): The income statement, elso known as the proft and loss (PQL) statement, provides a snapshot of the ...

The income statement, elso known as the proft and loss (PQL) statement, provides a snapshot of the financial performance of a company dunng o specified period of time. It reports a firm's gross income, expenses, net income, and the income that is avaliabie for distribution to its prefered and common shareholders. The income statement is prepared using the generally accepted accounting principles (GuAP) thet match the firm's revenues and expenses to the period in which they were incurred, not necessarily when cash was received or paid, Investors and analyts use the information given in the inceene statement and other financial statements and reports to evaluate the compary's financial performance and condition: Consider the following scenario: Cute Camel Woodcraft Company's income statement reports dota for its first year of ogeration. The firm's cEO would lke sales to increase by \( 25 \% \) next year. 1. Cute Camel is able to achieve this level of increased soles, but iss interest costs increose from \( 10 \% \) to \( 15 \% \) of earnings before interest and taxes (EBIT). 2. The company's operating costs (excluding depreciation and amortizetion) remain at \( 65 \% \) of net sales, and its dearecation and amortization expenses renain constant from yeor to yent. 3. The companys tax rate remains consant at \( 25 \% \) of its pre-tax income or eamings before taxes (EBT). 4. In Year 2, Cute Camel expects to pay \( \$ 100,000 \) and \( \$ 1,773,844 \) of prefered and commen stock dividencs, respectively. Complete the Year 2 income statement cata for Cute Come, then answer the questions that follow. Be sure to round each doliar value to the nearest whele dolar. Th 03- Assignment - Financial Statements, Cash Flow, and Taxes whole dollar. Qien the results of the previous income statement caiculations, complete the following statements: Given the results of the previous income statement calculations, complete the following statements: - In Year 2, if Cute Camet has 10,000 shares of preferred stock issued and outstanding, then each preferred share should expect to recelve in annual dividends. - If Cute Camel has 500,000 shares of common stock issued and outstanding, then the firm's eamings per share (EPS) is expected to change fram in Year 1 to in Year 2 . - Cute Cameis eamings before interest, taxes, depreciation and amortizotion (EBIDA) value changed from in Year 1 to in Year \( 2 . \) - It is to say that Cute Camel's net inflows and outflows of cash ot the end of Years 1 and 2 are equal to the company's annual contribution to retained carnings, \( \$ 2,620,250 \) and \( \$ 3,194,281 \), respectively. This is because of the items reported in the income staternent imvolve payments and receipts of cash.