(Solution) Module 11 Assignment – Analyzing, Forecasting, and Interpreting

Module 11 Assignment – Analyzing Forecasting and Interpreting

Question 1

Correct

Mark 12.00 out of 12.00

Question text

Forecasting an Income Statement

ADP reports the following income statement.

AUTOMATIC DATA PROCESSING INC.
Statement of Consolidated Earnings
For Year Ended June 30, 2019, $ millions
Total revenues	$14,175.0
Operating expenses	7,146.0
Systems development and programming costs	636.0
Depreciation and amortization	304.4
Total cost of revenues	8,086.4
Selling, general, and administrative expenses	3,064.0
Interest expense	130.0
Total expenses	11,280.4
Other (income) expense, net	(111.0)
Earnings before income taxes	3,005.6
Provision for income taxes	713.0
Net earnings	$2,292.6

Forecast ADP’s 2020 income statement assuming the following income statement relations. All percentages (other than total revenue growth and provision for income taxes) are based on historic percent of total revenues. Dollar figures are in millions

Assumptions
Total revenues growth	13.00%
Depreciation and amortization	$460.5
Interest expense	No change
Other (income) expense, net	No change
Income tax rate	25.00%

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

Solution

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Question 2 – Analyzing Forecasting and Interpreting

Question text

Analyzing, Forecasting, and Interpreting Both Income Statement and Balance Sheet

Following are the income statement and balance sheet of Seagate Technology for fiscal 2019.

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.

SEGATE TECHNOLOGY PLC
Consolidated Statement of Income
For Year Ended June 28, 2019, $ millions
Revenue	$10,390
Cost of revenue	7,458
Product development	991
Marketing and administrative	453
Amortization of intangibles	23
Restructuring and other, net	(22)
Total operating expenses	8,903
Income from operations	1,487
Interest income	84
Interest expense	(224)
Other, net	25
Other expense, net	(115)
Income before income taxes	1,372
(Benefit) provision for income taxes	(640)
Net income	$2,012

SEAGATE TECHNOLOGY PLC Consolidated Balance Sheet
Consolidated Balance Sheet
$ millions	June 28, 2019
Current assets
Cash and cash equivalents	$2,220
Accounts receivable, net	989
Inventories	970
Other current assets	184
Total current assets	4,363
Property, equipment and leasehold improvements, net	1,869
Goodwill	1,237
Other intangible assets, net	111
Deferred income taxes	1,114
Other assets, net	191
Total assets	$8,885
Current liabilities
Accounts payable	$1,420
Accrued employee compensation	169
Accrued warranty	91
Accrued expenses	552
Total current liabilities	2,232
Long-term accrued warranty	104
Long-term accrued income taxes .	4
Other noncurrent liabilities	130
Long-term debt, less current portion	4,253
Total liabilities	6,723
Shareholders’ equity
Ordinary shares— par value $0.0001, 2.6 billion shares authorized, 1,340,697,595 and
1,354,218,154 shares issued and outstanding, respectively	0
Additional paid-in capital	6,545
Accumulated other comprehensive loss	(34)
Accumulated deficit	(4,349)
Total shareholders’ equity	2,162
Total liabilities and shareholders’ equity	$8,885

Forecast Seagate Technology’s 2020 income statement using the following forecast assumptions, which are expressed as a percentage of revenue unless otherwise indicated.
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.

Forecast Seagate Technology’s 2020 balance sheet using the following forecast assumptions, which are expressed as a percentage of revenue unless otherwise indicated.
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.

RELATED: (Solution) Module 12 Assignment – Cost of Capital Measures

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Question 3

Question text

Forecast the Statement of Cash Flows

Following are the income statement and balance sheet of Seagate Technology.

SEAGATE TECHNOLOGY PLC Consolidated Statement of Income ($ millions) For Year Ended	June 2020 Forecasted	June 2019 Actual
Revenue	10,910	10,390
Cost of revenue	7,833	7,458
Product development	1,036	991
Marketing and administrative	480	453
Amortization of intangibles	23	23
Restructuring and other, net	0	(22)
Total operating expenses	9,372	8,903
Income from operations	1,538	1,487
Interest income	84	84
Interest expense	(224)	(224)
Other, net	25	25
Other expense, net	(115)	(115)
Income before income taxes	1,423	1,372
(Benefit) provision for income taxes	299	(640)
Net income	1,124	2,012

SEAGATE TECHNOLOGY PLCBalance Sheet ($ millions)	June 2020 Forecasted	June 2019 Actual
Current assets
Cash and cash equivalents	2,935	2,220
Accounts receivable, net	1,036	989
Inventories	1,015	970
Other current assets	196	184
Total current assets	5,182	4,363
Property, equipment and leasehold improvements, net	1,971	1,869
Goodwill	1,237	1,237
Other intangible assets, net	88	111
Deferred income taxes	1,167	1,114
Other assets, net	196	191
Total assets	9,841	8,885
Current liabilities
Accounts payable	1,495	$1,420
Accrued employee compensation	175	169
Accrued warranty	98	91
Accrued expenses	578	552
Total current liabilities	2,346	2,232
Long-term accrued warranty	109	104
Long-term accrued income taxes .	4	4
Other noncurrent liabilities	142	130
Long-term debt, less current portion	4,253	4,253
Total liabilities	6,854	6,723
Shareholders’ equity
Ordinary shares— par value $0.0001, 2.6 billion shares authorized, 1,340,697,595 and
and1,354,218,154 shares issued and outstanding, respectively	0	0
Additional paid-in capital	6,644	6,545
Accumulated other comprehensive loss	(34)	(34)
Accumulated deficit	(3,623)	(4,349)
Total shareholders’ equity	2,987	2,162
Total liabilities and shareholders’ equity	9,841	8,885

CAPEX (Increase in gross Property and equipment)/Revenue	5.8%
Depreciation expense	$633
Dividends	$398

Refer to the Seagate Technology (STX) financial information above. Prepare a forecast of its FY2020 statement of cash flows.

Round all answers to the nearest whole number. Use negative signs with answers, when appropriate.

Question 4 – Analyzing Forecasting and Interpreting

Question text

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.

• Income Statement
• Balance Sheet

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.

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Question 5 – Analyzing Forecasting and Interpreting

Question text

Forecast the Statement of Cash Flows

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	2,330
Selling, general, and administrative expense	10,418
Amortization of intangible assets	1,764
Restructuring charges, net	198
Certain litigation charges, net	166
Other operating expense, net	258
Operating profit	6,268
Other nonoperating income, net	(373)
Interest expense	1,444
Income before income taxes	5,197
Income tax provision	547
Net income	4,650
Net income loss attributable to noncontrolling interests	(19)
Net income attributable to Medtronic	$4,631

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	2,144
Total current assets	21,967
Property, plant, and equipment, net	4,675
Goodwill	39,959
Other intangible assets, net	20,560
Tax assets	1,519
Other assets	1,014
Total assets	$89,694
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	757
Total liabilities	39,482
Shareholders’ equity
Ordinary shares	0
Additional paid-in capital	26,532
Retained earnings	26,270
Accumulated other comprehensive loss	(2,711)
Total shareholders’ equity	50,091
Noncontrolling interests	121
Total equity	50,212
Total liabilities and equity	$89,694

Prepare a forecast of the FY2020 statement of cash flows using the provided financial information and following assumptions.
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.

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Question 6 – Analyzing Forecasting and Interpreting

Question text

Projecting NOPAT and NOA Using Parsimonious Forecasting Method

Following are Logitech’s sales, net operating profit after tax (NOPAT), and net operating assets (NOA) for its fiscal year ended March 31, 2019 ($ thousands).

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.

Financial information
Net sales	$2,788,322
Net operating profit after tax (NOPAT)	211,362
Net operating assets (NOA)	571,823

Use the parsimonious method to forecast Logitech’s sales, NOPAT, and NOA for fiscal years ended March 31, 2020 through 2023 using the following assumptions.

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: When completing the question in Excel, refer directly to the cells containing these assumptions, i.e., don’t type the NOPM number when making a calculation, refer to the cell.
Note: Use negative signs with answers, when appropriate.

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