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6. Projected financial statements and basic analysis Aa Aa You are the most creative analyst for Black Sheep Broadcasting Company, and your admirers want to see you work your analytical magic once more. 2016 Actual Results 2017 Initial Forecast Depreciation Number of common shares (millions) Net income Fixed operating costs except depreciation Earnings per share Interest Taxes Dividends per share Common dividends Earnings before interest and taxes Earnings before taxes Cost of goods sold Addition to retained earnings Net sales Gross profit (360) 20.0 $1,188 (900) $59 (360) (792) $32 (642) $2,340 $1,980 (14,400) $546 $18,000 $3,600 (468) 20.0 1,609 (1,170) $80 (360) (1,073) $32 (642) $3,042 $2,682 (18,720) $967 $23,400 $4,680 Which of the following are assumptions made by the initial income statement forecast? Check all that apply. The facility is currently operating at full capacity. The assigned depreciation method has changed. The facility is not currently operating at full capacity. The forecasted increase in net sales is 30%. Which of the following are assumptions made by the initial income statement forecast? Check all that apply. The facility is currently operating at full capacity. The assigned depreciation method has changed. The facility is not currently operating at full capacity. The forecasted increase in net sales is 30%. Additional external financing will be required by Black Sheep Broadcasting Company No additional external financing will be required. If Black Sheep Broadcasting Company had neither a sufficient amount of excess capacity to handle forecasted increases in operations nor the level of retained earnings required to increase asset levels up to the necessary level for production, this difference would be referred to as additional funds needed and could be acquired in which of the following forms? alternative fiduciary necessities added fair needs I. Issuing additional common stock additional financing needed additional funds needed II Borrowing from a bank using notes payable III. Issuing long-term bonds O O O O II and III I only Just III I and II I, II, and III Just

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