1 #1 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	$7,065
Cost of revenue	5,071
Product development	674
Marketing and administrative	308
Amortization of intangibles	16
Restructuring and other, net	(15)
Total operating expenses	6,054
Income from operations	1,011
Interest income	57
Interest expense	(152)
Other, net	17
Other expense, net	(78)
Income before income taxes	933
(Benefit) provision for income taxes	(435)
Net income	$1,368

SEAGATE TECHNOLOGY PLC Consolidated Balance Sheet
Consolidated Balance Sheet
$ millions	June 28, 2019
Current assets
Cash and cash equivalents	$1,510
Accounts receivable, net	673
Inventories	660
Other current assets	125
Total current assets	2,968
Property, equipment and leasehold improvements, net	1,271
Goodwill	841
Other intangible assets, net	75
Deferred income taxes	758
Other assets, net	130
Total assets	$6,043
Current liabilities
Accounts payable	$966
Accrued employee compensation	115
Accrued warranty	62
Accrued expenses	375
Total current liabilities	1,518
Long-term accrued warranty	71
Long-term accrued income taxes .	3
Other noncurrent liabilities	88
Long-term debt, less current portion	2,892
Total liabilities	4,572
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	4,462
Accumulated other comprehensive loss	(34)
Accumulated deficit	(2,957)
Total shareholders' equity	1,471
Total liabilities and shareholders' equity	$6,043

Forecast Seagate Technologys 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.

Assumptions
Revenue growth	5%	growth
Cost of revenue	71.8%	of revenue
Product development	9.5%	of revenue
Marketing and administrative	4.4%	of revenue
Amortization of intangibles		No change
Restructuring and other, net	$0	million
Interest income		No change
Interest expense		No change
Other, net		No change
Income tax rate	21%

	SEGATE TECHNOLOGY PLC
	Consolidated Statement of Income
	$ millions	June 2020
	Revenue	Answer
	Cost of revenue	Answer
	Product development	Answer
	Marketing and administrative	Answer
	Amortization of intangibles	Answer
	Restructuring and other, net	Answer
	Total operating expenses	Answer
	Income from operations	Answer
	Interest income	Answer
	Interest expense	Answer
	Other, net	Answer
	Other expense, net	Answer
	Income before income taxes	Answer
	(Benefit) provision for income taxes	Answer
	Net income	Answer

Forecast Seagate Technologys 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.

Assumptions
Accounts receivable, net	9.5%	of revenue
Inventories	9.3%	of revenue
Other current assets	1.8%	of revenue
Deferred income taxes	10.7%	of revenue
Other assets, net	1.8%	of revenue
Accounts payable	13.7%	of revenue
Accrued employee compensation	1.6%	of revenue
Accrued warranty	0.9%	of revenue
Accrued expenses	5.3%	of revenue
Long-term accrued warranty	1.0%	of revenue
Other noncurrent liabilities	1.3%	of revenue
Goodwill		No change
Long-term accrued income taxes		No change
Long-term debt, less current portion		No change
Ordinary Shares		No change
Accumulated other comprehensive loss		No change
CAPEX	5.8%	of revenue
Depreciation expense	5.4%	of beginning Property, equipment and leasehold improvements, gross
Beginning Property, equipment and leasehold improvements, gross	$6,688	million
Stock-based compensation	$99	million, increases Capital in excess of par value by the same amount. Assume that the company routinely includes this form of compensation in operating expenses each year.
Dividend payout ratio	35.4%

	SEAGATE TECHNOLOGY PLC Consolidated Balance Sheet
	Consolidated Balance Sheet
	$ millions	June 2020
	Current assets
	Cash and cash equivalents	Answer
	Accounts receivable, net	Answer
	Inventories	Answer
	Other current assets	Answer
	Total current assets	Answer
	Property, equipment and leasehold improvements, net	Answer
	Goodwill	Answer
	Other intangible assets, net	Answer
	Deferred income taxes	Answer
	Other assets, net	Answer
	Total assets	Answer
	Current liabilities
	Accounts payable	Answer
	Accrued employee compensation	Answer
	Accrued warranty	Answer
	Accrued expenses	Answer
	Total current liabilities	Answer
	Long-term accrued warranty	Answer
	Long-term accrued income taxes .	Answer
	Other noncurrent liabilities	Answer
	Long-term debt, less current portion	Answer
	Total liabilities	Answer
	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	Answer
	Additional paid-in capital	Answer
	Accumulated other comprehensive loss	Answer
	Accumulated deficit	Answer
	Total shareholders' equity	Answer
	Total liabilities and shareholders' equity	Answer