Need detailed help with the proforma income statement # Common-Size and Forecast Income Statements### OverviewThis section presents the income statements for The Gap, Inc. and outlines the process for preparing common-size income statements for fiscal years 2014 and 2015, as well as a forecast for 2016.### Common-Size Income Statements**Fiscal Years 2014 and 2015:**- **Net Sales:** - January 31, 2015: $16,435 million - February 1, 2014: $16,148 million- **Cost of Goods Sold & Occupancy Expenses:** - January 31, 2015: $10,146 million - February 1, 2014: $9,855 million- **Gross Profit:** - January 31, 2015: $6,289 million - February 1, 2014: $6,293 million- **Operating Expenses:** - January 31, 2015: $4,206 million - February 1, 2014: $4,144 million- **Operating Income:** - January 31, 2015: $2,083 million - February 1, 2014: $2,149 million- **Interest Expense:** - January 31, 2015: $75 million - February 1, 2014: $61 million- **Interest Income:** - January 31, 2015: -$5 million - February 1, 2014: -$5 million- **Income Before Income Taxes:** - January 31, 2015: $2,013 million - February 1, 2014: $2,093 million- **Income Taxes:** - January 31, 2015: $751 million - February 1, 2014: $813 million- **Net Earnings:** - January 31, 2015: $1,262 million - February 1, 2014: $1,280 million### Income Statement Forecast for Fiscal Year 2015**Assumptions:**- **Net Sales:** $15,000 million- **Cost of Goods Sold & Occupancy Expenses:** 64% of sales- **Operating ### Transcription and Explanation of the Image for Educational Purposes#### Income Statement Data and Instructions1. **Historical Data (2014):** - **Operating Income:** - Income: $2,083 million - Taxes: $751 million - Net Earnings: $1,262 million2. **Forecast Instructions for 2015 (Fiscal Year Ending January 30, 2016):** - **Assumptions:** - Net sales are projected to be $15,000 million. - Cost of goods sold (COGS) and occupancy expenses are estimated to account for 64% of total sales. - Operating expenses are expected to be 26% of sales. - Interest income and interest expense remain consistent with 2014 figures. - The effective tax rate is set at 39%. - **Rounding Instructions:** - Round all calculated figures to the nearest dollar. - Use rounded figures for subsequent calculations. - Indicate interest income with a negative sign.3. **Pro Forma Income Statement Template (January 30, 2016):** | The Gap, Inc. | Proforma Income Statement | Jan. 30, 2016 | |---|---|---| | **Net Sales** | $0 | | **Cost of Goods Sold & Occupancy Expenses** | 0 | | **Gross Profit** | 0 | | **Operating Expenses** | 0 | | **Operating Income** | 0 | | **Interest Expense** | 0 | | **Interest Income** | 0 | | **Income Before Income Taxes** | 0 | | **Income Taxes** | 0 | | **Net Earnings** | $0 |#### Graphs/Diagrams Explanation- **Tables:** - The table at the top shows historical and forecasted financial data for The Gap, Inc., providing an overview of operating income, taxes, and net earnings with both absolute figures and percentage changes. - **Proforma Income Statement:** - The table labeled "Proforma Income Statement" provides a template for students or analysts to fill in forecasted financial data based on the provided assumptions. It’s an exercise in financial forecasting, demonstrating how various financial components interact to impact overall earnings.

Income statement is a statement that shows the total incomes and expenditure incurred or generated…

b. Prepare an income statement forecast for the fiscal year 2015 (ending January 30, 2016), based on the following assumptions: • Net sales total $15,000 million. • Cost of goods sold and occupancy expenses are 64% of sales. • Operating expenses total 26% of sales. • Interest income and interest expense are unchanged from the 2014 amounts. • The Gap's effective tax rate is 39%. Round answers to the nearest dollar. Use rounded answers for subsequent calculations. Use a negative sign with your interest income answer only. The Gap, Inc. Proforma Income Statement Jan. 30, 2016 Net sales Cost of goods sold & occupancy expenses Gross profit Operating expenses Operating income Interest expense Interest income Income before income taxes Income taxes Net earnings 24