Use the following assumptions to prepare a forecast of the company’s income statement for fiscal year 2020. Note: Complete the entire question in Excel (template provided above). Using Excel, format each answer to two decimal places. Use Increase Decimal or Decrease Decimal to adjust decimal places. Do not round answers. Then enter the answers into the provided spaces below with _two decimal places_. Note: Use negative signs with answers, when appropriate. Income statement assumptions Net sales increase 8% growth Cost of products sold 30.0% of net sales Research and development expense 7.6% of net sales Selling, general, and administrative expense 34.1% of net sales Amortization of intangible assets 5.8% of net sales Restructuring charges, net 75% of 2019 restructuring expense Certain litigation charges, net $150 million Other operating expense, net No change in $ amount Other nonoperating income, net No change in $ amount Interest expense No change in $ amount Income tax provision 15% of pretax income Income attributable to noncontrolling interests No change in $ amount Balance sheet assumptions Investments No change Accounts receivable, less allowance 20.4% of net sales Inventories, net 12.3% of net sales Other current assets 7% of net sales Goodwill No change Tax assets 5% of net sales Other assets 3.3% of net sales Accounts payable 6.4% of net sales Accrued compensation (current liability) 7.2% of net sales Accrued compensation and retirement benefits (noncurrent liability) No change Accrued income taxes (current liability) 1.9% of net sales Other accrued expenses 9.6% of net sales Accrued income taxes (noncurrent liability) 9.3% of net sales Deferred tax liabilities 4.2% of net sales Other liabilities 2.5% of net sales Ordinary shares No change Accumulated other comprehensive loss No change Net income attributable to noncontrolling interest $19 million Dividends in FY2020 $2,853 million CAPEX in FY2019 $1,134 $million, forecast CAPEX at historic % of net sales Depreciation expense in FY2020 $950 million Amortization expense in FY2020 $1,914 million Debt due in FY2020 $838 million Debt due in FY2021 $2,058 million Medtronic PLC Consolidated Balance Sheet $ millions 2020 Current assets Cash and cash equivalents Answer Investments Answer Accounts receivable, net Answer Inventories, net Answer Other current assets Answer Total current assets Answer Property, plant, and equipment, net Answer Goodwill Answer Other intangible assets, net Answer Tax assets Answer Other assets Answer Total assets Answer Current liabilities Current debt obligations Answer Accounts payable Answer Accrued compensation Answer Accrued income taxes Answer Other accrued expenses Answer Total current liabilities Answer Long-term debt Answer Accrued compensation and retirement benefits Answer Accrued income taxes Answer Deferred tax liabilities Answer Other liabilities Answer Total liabilities Answer Shareholders’ equity Ordinary shares Answer Additional paid-in capital Answer Retained earnings Answer Accumulated other comprehensive loss Answer Total shareholders’ equity Answer Noncontrolling interests Answer Total equity Answer Total liabilities and equity

Use the following assumptions to prepare a forecast of the company’s income statement for fiscal year 2020. Note: Complete the entire question in Excel (template provided above). Using Excel, format each answer to two decimal places. Use Increase Decimal or Decrease Decimal to adjust decimal places. Do not round answers. Then enter the answers into the provided spaces below with _two decimal places_. Note: Use negative signs with answers, when appropriate. Income statement assumptions Net sales increase 8% growth Cost of products sold 30.0% of net sales Research and development expense 7.6% of net sales Selling, general, and administrative expense 34.1% of net sales Amortization of intangible assets 5.8% of net sales Restructuring charges, net 75% of 2019 restructuring expense Certain litigation charges, net $150 million Other operating expense, net No change in $ amount Other nonoperating income, net No change in $ amount Interest expense No change in $ amount Income tax provision 15% of pretax income Income attributable to noncontrolling interests No change in $ amount Balance sheet assumptions Investments No change Accounts receivable, less allowance 20.4% of net sales Inventories, net 12.3% of net sales Other current assets 7% of net sales Goodwill No change Tax assets 5% of net sales Other assets 3.3% of net sales Accounts payable 6.4% of net sales Accrued compensation (current liability) 7.2% of net sales Accrued compensation and retirement benefits (noncurrent liability) No change Accrued income taxes (current liability) 1.9% of net sales Other accrued expenses 9.6% of net sales Accrued income taxes (noncurrent liability) 9.3% of net sales Deferred tax liabilities 4.2% of net sales Other liabilities 2.5% of net sales Ordinary shares No change Accumulated other comprehensive loss No change Net income attributable to noncontrolling interest $19 million Dividends in FY2020 $2,853 million CAPEX in FY2019 $1,134 $million, forecast CAPEX at historic % of net sales Depreciation expense in FY2020 $950 million Amortization expense in FY2020 $1,914 million Debt due in FY2020 $838 million Debt due in FY2021 $2,058 million Medtronic PLC Consolidated Balance Sheet $ millions 2020 Current assets Cash and cash equivalents Answer Investments Answer Accounts receivable, net Answer Inventories, net Answer Other current assets Answer Total current assets Answer Property, plant, and equipment, net Answer Goodwill Answer Other intangible assets, net Answer Tax assets Answer Other assets Answer Total assets Answer Current liabilities Current debt obligations Answer Accounts payable Answer Accrued compensation Answer Accrued income taxes Answer Other accrued expenses Answer Total current liabilities Answer Long-term debt Answer Accrued compensation and retirement benefits Answer Accrued income taxes Answer Deferred tax liabilities Answer Other liabilities Answer Total liabilities Answer Shareholders’ equity Ordinary shares Answer Additional paid-in capital Answer Retained earnings Answer Accumulated other comprehensive loss Answer Total shareholders’ equity Answer Noncontrolling interests Answer Total equity Answer Total liabilities and equity

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Forecast Income Statement and Balance Sheet

Following are the income statement and balance sheet for Medtronic PLC.

Note: Complete the entire question using the following Excel template: Excel Template. Then enter the answers into the provided spaces below with two decimal places.

Medtronic PLC
Consolidated Statement of Income
$ millions, For Fiscal Year Ended	April 26, 2019
Net sales	$30,557
Costs and expenses
Cost of products sold	9,155
Research and development expense	979
Selling, general, and administrative expense	10,418
Amortization of intangible assets	1,764
Restructuring charges, net	83
Certain litigation charges, net	166
Other operating expense, net	258
Operating profit	7,734
Other nonoperating income, net	(157)
Interest expense	1,444
Income before income taxes	6,447
Income tax provision	547
Net income	5,900
Net income loss attributable to noncontrolling interests	(19)
Net income attributable to Medtronic	$5,881

Medtronic PLC
Consolidated Balance Sheet
$ millions	April 26, 2019
Current assets
Cash and cash equivalents	$4,393
Investments	5,455
Accounts receivable, net	6,222
Inventories, net	3,753
Other current assets	900
Total current assets	20,723
Property, plant, and equipment, net	4,675
Goodwill	39,959
Other intangible assets, net	20,560
Tax assets	638
Other assets	1,014
Total assets	$87,569
Current liabilities
Current debt obligations	$838
Accounts payable	1,953
Accrued compensation	2,189
Accrued income taxes	567
Other accrued expenses	2,925
Total current liabilities	8,472
Long-term debt	24,486
Accrued compensation and retirement benefits	1,651
Accrued income taxes	2,838
Deferred tax liabilities	1,278
Other liabilities	318
Total liabilities	39,043
Shareholders’ equity
Ordinary shares	0
Additional paid-in capital	24,846
Retained earnings	26,270
Accumulated other comprehensive loss	(2,711)
Total shareholders’ equity	48,405
Noncontrolling interests	121
Total equity	48,526
Total liabilities and equity	$87,569

Income statement assumptions
Net sales increase	8%	growth
Cost of products sold	30.0%	of net sales
Research and development expense	7.6%	of net sales
Selling, general, and administrative expense	34.1%	of net sales
Amortization of intangible assets	5.8%	of net sales
Restructuring charges, net	75%	of 2019 restructuring expense
Certain litigation charges, net	$150	million
Other operating expense, net		No change in $ amount
Other nonoperating income, net		No change in $ amount
Interest expense		No change in $ amount
Income tax provision	15%	of pretax income
Income attributable to noncontrolling interests		No change in $ amount

Balance sheet assumptions
Investments		No change
Accounts receivable, less allowance	20.4%	of net sales
Inventories, net	12.3%	of net sales
Other current assets	7%	of net sales
Goodwill		No change
Tax assets	5%	of net sales
Other assets	3.3%	of net sales
Accounts payable	6.4%	of net sales
Accrued compensation (current liability)	7.2%	of net sales
Accrued compensation and retirement benefits (noncurrent liability)		No change
Accrued income taxes (current liability)	1.9%	of net sales
Other accrued expenses	9.6%	of net sales
Accrued income taxes (noncurrent liability)	9.3%	of net sales
Deferred tax liabilities	4.2%	of net sales
Other liabilities	2.5%	of net sales
Ordinary shares		No change
Accumulated other comprehensive loss		No change
Net income attributable to noncontrolling interest	$19	million
Dividends in FY2020	$2,853	million
CAPEX in FY2019	$1,134	$million, forecast CAPEX at historic % of net sales
Depreciation expense in FY2020	$950	million
Amortization expense in FY2020	$1,914	million
Debt due in FY2020	$838	million
Debt due in FY2021	$2,058	million

	Medtronic PLC
	Consolidated Balance Sheet
	$ millions	2020
	Current assets
	Cash and cash equivalents	Answer
	Investments	Answer
	Accounts receivable, net	Answer
	Inventories, net	Answer
	Other current assets	Answer
	Total current assets	Answer
	Property, plant, and equipment, net	Answer
	Goodwill	Answer
	Other intangible assets, net	Answer
	Tax assets	Answer
	Other assets	Answer
	Total assets	Answer
	Current liabilities
	Current debt obligations	Answer
	Accounts payable	Answer
	Accrued compensation	Answer
	Accrued income taxes	Answer
	Other accrued expenses	Answer
	Total current liabilities	Answer
	Long-term debt	Answer
	Accrued compensation and retirement benefits	Answer
	Accrued income taxes	Answer
	Deferred tax liabilities	Answer
	Other liabilities	Answer
	Total liabilities	Answer
	Shareholders’ equity
	Ordinary shares	Answer
	Additional paid-in capital	Answer
	Retained earnings	Answer
	Accumulated other comprehensive loss	Answer
	Total shareholders’ equity	Answer
	Noncontrolling interests	Answer
	Total equity	Answer
	Total liabilities and equity	Answer

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