Analyzing, Forecast, and Interpret Income Statement and Balance Sheet Following are the income statement and balance sheet of Whole Foods Market Inc. WHOLE FOODS MARKET INC. Consolidated Statement of Operations Fiscal Years Ended (in millions) Sept 25, 2016 Sept 27, 2015 Sales $15,724 $15,389 Cost of goods sold and occupancy costs 10,313 9,973 Gross profit 5,411 5,416 Selling, general and administrative expenses 4,477 4,472 Pre-opening expenses 64 67 Relocation, store closures and lease termination costs 13 16 Operating income 857 861 Interest expense (41) - Investment and other income 11 17 Income before income taxes 827 878 Provision for income taxes 320 342 Net Income $507 $536 WHOLE FOODS MARKET INC. Consolidated Balance Sheet (In millions) Sept 25, 2016 Sept 27, 2015 Assets Current assets Cash and cash equivalents $351 $237 Short-term investments-available-for-sale securities 379 155 Restricted cash 122 127 Accounts receivable 242 218 Merchandise inventories 517 500 Prepaid expenses and other current assets 167 108 Deferred income taxes 197 199 Total current assets 1,975 1,544 Property and equipment, net 3,442 3,163 Long-term investments--available-for-sale securities - 63 Goodwill 710 710 Intangible assets, net 74 79 Deferred income taxes 100 144 Other assets 40 38 Total assets $6,341 $5,741 Liabilities and shareholders' equity Current liabilities Current installments of long-term debt& capital lease obligations $3 $3 Accounts payable 307 295 Accrued payroll, bonus and other benefits due team members 407 436 Dividends payable 43 45 Other current liabilities 581 473 Total current liabilities 1,341 1,252 Long-term debt& capital lease obligations, less current installments 1,048 62 Deferred lease liabilities 640 587 Other long-term liabilities 88 71 Total liabilities 3,117 1,972 Shareholders' equity Common stock, no par value, 1,200 shares authorized;377.0 and 377.1 shares issued; 318.3 and 348.9 share outstanding at 2016 and 2015, respectively 2,933 2,904 Common stock in treasury, at cost, 58.7 and 28.2 shares at 2016 and 2015, respectively (2,026) (1,124) Accumulated other comprehensive income loss (32) (28) Retained earnings 2,349 2,017 Total shareholders' equity 3,224 3,769 Total liabilities and shareholders' equity $6,341 $5,741 (a.) Forecast the 2017 income statement for Whole Foods using the following forecast assumptions, which are expressed as a percentage of sales unless otherwise noted (assume "no change" for accounts not listed). ($ millions) Sales growth 1% Cost of good sold and occupancy costs 65.6% Selling, general and administrative expenses 28.5% Pre-opening expenses 0.4% Relocation, store closures and lease termination costs $0 Interest expense No change Investment and other income No change Provision for income taxes/Pretax income 37% Round all answers to the nearest whole number. Do not use negative signs with your answers. Whole Foods Market, Inc. Forecasted Statement of Operations ($ millions) 2017 Estimated Sales Answer 15,389 Cost of goods sold and occupancy costs Answer 9,973 Selling, general and administrative expenses Answer 4,472 Pre-opening expenses Answer 64 Relocation, store closures and lease termination costs Answer 0 Operating income Answer 861 Interest expense Answer 0 Investment and other income Answer 11 Income before income taxes Answer 878 Provision for income taxes Answer 342 Net income Answer 536 (b.) Forecast the 2017 balance sheet for Whole Foods using the following forecast assumptions ($ in millions). Accounts receivable/Sales 1.8% Merchandise inventories/Sales 3.3% Prepaid expenses and other current assets/Sales 1.1% Deferred income taxes (current assets)/Sales 1.3% Deferred income taxes (noncurrent assets)/Sales 0.6% Accounts payable/Sales 2.0% Accrued payroll, bonus and other benefits due team members/Sales 2.6% Other current liabilities/Sales 3.7% Depreciation expense as a percentage of PPE, net, at start of the year 15.0% CAPEX and development of new properties (all PPE) as a percentage of Sales 5.0% Amortization of intangible assets $6 Dividends payable as a percentage of dividends 25.0% Long-term debt repayment due in 2017 $3 Long-term debt repayment due in 2018 $65 Increase in treasury stock in 2017 $200 Dividends as percentage of net income 30.0% Assume no change for goodwill, other assets, deferred lease liabilities, other long-term liabilities, common stock, and AOCL. Round answers to the nearest whole number. Do not use negative signs with your answers. Whole Foods Market, Inc. Forecasted Balance Sheet, ($ millions) 2017 Estimated Current assets Cash and cash equivalents Answer 351 Short-term investments Answer 379 Restricted cash Answer 122 Accounts receivable Answer 242 Merchandise inventories Answer 517 Prepaid expenses Answer 167 Deferred income taxes Answer 197 Total current assets Answer 1,975 Property and equipment, net Answer 3,442 Long-term investments Answer 0 Goodwill Answer 710 Intangible assets, net Answer 74 Deferred income taxes Answer 100 Other assets Answer 40 Total assets Answer 6,341 Current liabilities Current installments of long-term debt Answer 3 Accounts payable Answer 307 Accrued payroll, bonus and benefits Answer 407 Dividends payable Answer 43 Other current liabilities Answer 581 Total current liabilities Answer 1,341 Long-term debt and capital leases Answer 1,048 Deferred lease liabilities Answer 640 Other long-term liabilities Answer 88 Total liabilities Answer 3,117 Shareholders' equity: Common stock, no par value Answer 2,933 Common stock in treasury Answer (2,026) Accumulated other comprehensive loss Answer (32) Retained earnings Answer 2,349 Total shareholders' equity Answer 3,224 Total liabilities and equity Answer 6,341