,5 P12-32. Forecast the Income Statement, Balance Sheet, and Statement of Cash Flows Following are fiscal year financial statements of Costco. ST) COSTO WHOLESALE CORP Consolidated Statements of Income For Year Ended (5 millions) Sep. 1, 2019 Sep. 2, 2018 Net sales. $149,351 $138.034 Membership fees 3.352 3,142 Total revenue 152.703 141,576 Merchandise costs 132.886 123,152 Selling, general and administrative 14.994 13,876 Preopening expenses 86 68 Operating income 4.737 4.480 Interest expense. (150) (150) Interest income and other net 178 121 Income before income taxes 4.755 4,442 Provision for income taxes 1.051 1,263 Net income including noncontrolling interests 3,704 3,179 Net income attributable to noncontrolling interests. (45 Net income attributable to Costco $ 3,659 $ 3,134 145 Sep. 1, 2019 Sep. 2, 2018 $ 8,384 1,060 1,535 11.395 COSTO WHOLESALE CORP Consolidated Balance Sheets In millions, except par value Current Assets Cash and cash equivalents. Short-term investments Receivables, net Merchandise inventories. Other current assets Total current assets. Property and Equipment Land Buildings and improvements Equipment and fixtures Construction in progress Gross property and equipment Less accumulated depreciation and amortization Net property and equipment Other assets. Total assets $ 6,055 1,204 1,609 11.040 321 20.289 23,485 6,417 17,136 7.801 1.272 32.626 (11.736) 20,890 1,025 $45.400 6,199 16,107 7,274 1.140 30.714 (11,033) 19,681 860 $40,830 cord Sep 1, 2019 Sep. 2, 2018 continued from previous page COSTO WHOLESALE CORP Consolidated Balance Sheets In millions, except par value Current Liabilities Accounts payable Accrued salaries and benefits Accrued member rowards Deferred membership fees. Current portion of long-term debt Other current liabilities Total current liabilities.. Long-term debt, excluding current portion Other liabilities.. Total liabilities... Equity Preferred stock 8.01 par value: 100,000,000 shares authorized no shares issued and outstanding Common stock $0.01 par value: 900,000,000 shares authorized 439,625,000 and 438.189,000 shares issued and outstanding Additional paid-in capital... Accumulated other comprehensive loss. Retained earings Total Costco stockholders' equity Noncontrolling interests Total equity. Total abilities and equity $11.679 3.176 1,180 1.711 1.699 3,792 23.237 5,124 1.455 29.816 $11.237 2.990 1.057 1.624 90 2.924 19.925 6.487 1.314 27.727 6.417 (1.436) 10.258 15.243 341 15,584 $45.400 6.107 (1.1993 7887 12.799 304 13,103 $40.830 Required Forecast Costco's income statement, balance sheet, and statement of cash flows for the year ended September 1, 2020. Combine all property and equipment accounts into Net property and equipment What do the forecasts imply about Costco's financing needs in 2020? Forecasts assumptions Forecast Net sales and Membership fees using their respective historical growth rates (2018 to 2019). Forecast the following as a percentage of Net sales: Merchandise costs. Merchandise inventories. Accrued member rewards Receivables.net. Accounts payable Forecast income tax as 23% of pretax income Forecast Deferred membership fees as a percentage of Membership fees. Assume no change in the balance of the following: Preopening expenses Short-term investments Interest expense Preferred stock . Interest income Common stock Net income attributable to no controlling Accumulated other comprchensive loss interest Debe maturing in fiscal 2020 and 2021 is $1,699 million and S1,094 million, respectively. The company anticipates repurchasing $250 million in common stock in fiscal 2020 The 2019 statement of cash flows reports the following: Depreciation expense of $1,492 million Dividends of S1.038 million (to forecast 2020 dividends, use the 2019 dividend payout ratio as a percentage of net income attributable to Costco shareholders) Stock-based compensation (a noncash expense that is included in SG&A expense and is added to Additional paid-in capital of 595 million CAPEX of $2,998 million Forecast all other items as a percentage of total revenues. Note: Round historical rates to three decimal places. For example, round 0.04556 10 4.6% Required Forecast Costco's income statement, balance sheet, and statement of cash flows for the year ended September 1, 2020. Combine all property and equipment accounts into Net property and equipment. What do the forecasts imply about Costco's financing needs in 2020? ,5 P12-32. Forecast the Income Statement, Balance Sheet, and Statement of Cash Flows Following are fiscal year financial statements of Costco. ST) COSTO WHOLESALE CORP Consolidated Statements of Income For Year Ended (5 millions) Sep. 1, 2019 Sep. 2, 2018 Net sales. $149,351 $138.034 Membership fees 3.352 3,142 Total revenue 152.703 141,576 Merchandise costs 132.886 123,152 Selling, general and administrative 14.994 13,876 Preopening expenses 86 68 Operating income 4.737 4.480 Interest expense. (150) (150) Interest income and other net 178 121 Income before income taxes 4.755 4,442 Provision for income taxes 1.051 1,263 Net income including noncontrolling interests 3,704 3,179 Net income attributable to noncontrolling interests. (45 Net income attributable to Costco $ 3,659 $ 3,134 145 Sep. 1, 2019 Sep. 2, 2018 $ 8,384 1,060 1,535 11.395 COSTO WHOLESALE CORP Consolidated Balance Sheets In millions, except par value Current Assets Cash and cash equivalents. Short-term investments Receivables, net Merchandise inventories. Other current assets Total current assets. Property and Equipment Land Buildings and improvements Equipment and fixtures Construction in progress Gross property and equipment Less accumulated depreciation and amortization Net property and equipment Other assets. Total assets $ 6,055 1,204 1,609 11.040 321 20.289 23,485 6,417 17,136 7.801 1.272 32.626 (11.736) 20,890 1,025 $45.400 6,199 16,107 7,274 1.140 30.714 (11,033) 19,681 860 $40,830 cord Sep 1, 2019 Sep. 2, 2018 continued from previous page COSTO WHOLESALE CORP Consolidated Balance Sheets In millions, except par value Current Liabilities Accounts payable Accrued salaries and benefits Accrued member rowards Deferred membership fees. Current portion of long-term debt Other current liabilities Total current liabilities.. Long-term debt, excluding current portion Other liabilities.. Total liabilities... Equity Preferred stock 8.01 par value: 100,000,000 shares authorized no shares issued and outstanding Common stock $0.01 par value: 900,000,000 shares authorized 439,625,000 and 438.189,000 shares issued and outstanding Additional paid-in capital... Accumulated other comprehensive loss. Retained earings Total Costco stockholders' equity Noncontrolling interests Total equity. Total abilities and equity $11.679 3.176 1,180 1.711 1.699 3,792 23.237 5,124 1.455 29.816 $11.237 2.990 1.057 1.624 90 2.924 19.925 6.487 1.314 27.727 6.417 (1.436) 10.258 15.243 341 15,584 $45.400 6.107 (1.1993 7887 12.799 304 13,103 $40.830 Required Forecast Costco's income statement, balance sheet, and statement of cash flows for the year ended September 1, 2020. Combine all property and equipment accounts into Net property and equipment What do the forecasts imply about Costco's financing needs in 2020? Forecasts assumptions Forecast Net sales and Membership fees using their respective historical growth rates (2018 to 2019). Forecast the following as a percentage of Net sales: Merchandise costs. Merchandise inventories. Accrued member rewards Receivables.net. Accounts payable Forecast income tax as 23% of pretax income Forecast Deferred membership fees as a percentage of Membership fees. Assume no change in the balance of the following: Preopening expenses Short-term investments Interest expense Preferred stock . Interest income Common stock Net income attributable to no controlling Accumulated other comprchensive loss interest Debe maturing in fiscal 2020 and 2021 is $1,699 million and S1,094 million, respectively. The company anticipates repurchasing $250 million in common stock in fiscal 2020 The 2019 statement of cash flows reports the following: Depreciation expense of $1,492 million Dividends of S1.038 million (to forecast 2020 dividends, use the 2019 dividend payout ratio as a percentage of net income attributable to Costco shareholders) Stock-based compensation (a noncash expense that is included in SG&A expense and is added to Additional paid-in capital of 595 million CAPEX of $2,998 million Forecast all other items as a percentage of total revenues. Note: Round historical rates to three decimal places. For example, round 0.04556 10 4.6% Required Forecast Costco's income statement, balance sheet, and statement of cash flows for the year ended September 1, 2020. Combine all property and equipment accounts into Net property and equipment. What do the forecasts imply about Costco's financing needs in 2020