1.Use the income statement for GM to answer the required questions.

Use the following assumptions to forecast the GM income statement for FY2017.

Net sales will decrease by 1.5% (150 basis points) in FY 2017

Because of ongoing restructuring and efficiency improvement measures, operating expenses as a percentage of net sales will be lower than in FY2016 as follows:

oCost of sales: 200 basis points lower.

oSGA expenses: 50 basis points lower.

No announced divestitures for FY2017.

Restructuring, impairment and other exit costs will be half the dollar amount reported in FY2016.

Tax expense as a percentage of pretax income will remain unchanged.

The following line items remain unchanged in dollar terms:

oInterest, net.

oAfter-tax earnings from joint ventures

oNet earnings attributable to redeemable and noncontrolling interests.