1. Following are the financial statements of Tie-On Inc. for the year ended December 31, 2019. Prepare a forecasted income statement and balance sheet for the company for the next year. TIE-ON INCORPORATED Consolidated Balance Sheets 2019 2018 (in millions) Cash and cash equivalents $ 77.6 $ 92.8 Trade and other accounts receivable-net 598.8 562.5 Finance receivables-net 472.5 447.3 Contract receivables-net 88.1 82.1 Inventories, net 530.5 497.8 Prepaid expenses and other assets 116.5 106.3 Total current assets 1,884.0 1,788.8 Property and equipment, net 425.2 413.5 Deferred income tax assets 72.8 60.4 Long-term finance receivables-net 934.5 772.7 Long-term contract receivables-net 286.7 266.6 Goodwill 895.5 790.1 Other intangibles, net 184.6 195.0 Other assets 39.9 44.0 Total assets $4,723.2 $4,331.1 Notes payable and current maturities of LT debt $ 301.4 $ 18.4 Accounts payable 170.9 148.3 Accrued benefits 52.8 52.1 Accrued compensation 89.8 91.0 Franchise deposits 66.7 64.4 Other accrued liabilities 307.9 296.0 Total current liabilities 989.5 670.2 Long-term debt 708.8 861.7 Deferred income tax liabilities 13.1 14.3 Retiree health care benefits 36.7 37.9 Pension liabilities 246.5 227.8 Other long-term liabilities 93.4 88.5 Total liabilities 2,088.0 1,900.4 Shareholders equity attributable to Tie-On Inc. Common stock 67.4 67.4 Additional paid-in capital 317.3 296.3 Retained earnings 3,384.9 2,986.9 Accumulated other comprehensive loss (498.5) (364.2) Treasury stock at cost (653.9) (573.7) Total shareholders equity attributable to Tie-On Inc. 2,617.2 2,412.7 Noncontrolling interests 18.0 18.0 Total shareholders equity 2,635.2 2,430.7 Total liabilities and shareholders equity $ 4,723.2 $ 4,331.1 TIE-ON INCORPORATED Consolidated Statements of Earnings For the Fiscal Year (in millions) 2019 2018 Net sales $ 3,430.4 $ 3,352.8 Cost of goods sold (1,720.8) (1,704.5) Gross profit 1,709.6 1,648.3 Operating expenses, net (1,054.1) (1,053.7) Operating earnings before financial services 655.5 594.6 Financial services revenue 281.4 240.3 Financial services expenses (82.7) (70.1) Operating earnings from financial services 198.7 170.2 Operating earnings 854.2 764.8 Interest expense (52.2) (51.9) Other income (expense)-net (0.6) (2.4) Earnings before income taxes and equity earnings 801.4 710.5 Income tax expense (244.3) (221.2) Earnings before equity earnings 557.1 489.3 Equity earnings, net of tax 2.5 1.3 Net earnings 559.6 490.6 Net earnings attributable to noncontrolling interests (13.2) (11.9) Net earnings attributable to Tie-On Incorporated $ 546.4 $ 478.7 To forecast the financial statements, make the following assumptions. For accounts that are not included in the list below, assume that the amount will not change for the forecasted year. Net sales growth 3.0% Cost of goods sold to net sales 50.2% Operating expenses to net sales 30.7% Financial services revenue growth 17.0% Financial services expenses to financial services revenue 29.4% Income taxes to income before tax 30.5% Noncontrolling interest net earnings to net earnings 2.4% Trade A/R to net sales 17.5% Inventory to net sales 15.5% CAPEX to net sales 2.3% Depreciation to start of year PPE, net 12.3% Amortization expense to start of year intangibles, net 13.6% A/P to net sales 5.0% Other accrued liabilities to net sales 9.0% Notes payable and current maturities of long-term debt $0 Dividends paid in 2020.. $0

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