Analyzing, Forecasting, and Interpreting Both Income Statement and Balance Sheet Following are the income statement and balance sheet of Seagate Technology for fiscal 2019.

SEAGATE TECHNOLOGY PLC Consolidated Statement of Income
For Year Ended June 28, 2019 ($ millions)
Revenue	$10,390
Cost of revenue	7,458
Product development	991
Marketing and administrative	453
Amortization of intangibles	23
Restructuring and other, net	(22)
Total operating expenses	8,903
Income from operations	1,487
Interest income	84
Interest expense	224
Other, net income	25
Other expense, net	115
Income before income taxes	1,372
(Benefit) provision for income taxes	(640)
Net income	$ 2,012

SEAGATE TECHNOLOGY PLC Consolidated Balance Sheet
June 28, 2019 ($ millions)
Current assets
Cash and cash equivalents	$2,220
Accounts receivable, net	989
Inventories	970
Other current assets	184
Total current assets	4,363
Property, equipment and leasehold improvements, net	1,869
Goodwill	1,237
Other intangible assets, net	111
Deferred income taxes	1,114
Other assets, net	191
Total assets	$8,885
Current liabilities
Accounts payable	$1,420
Accrued employee compensation	169
Accrued warranty	91
Accrued expenses	552
Total current liabilities	2,232
Long-term accrued warranty	104
Long-term accrued income taxes .	4
Other noncurrent liabilities	130
Long-term debt, less current portion	4,253
Total liabilities	6,723
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	6,545
Accumulated other comprehensive loss	(34)
Accumulated deficit	(4,349)
Total shareholders' equity	2,162
Total liabilities and shareholders' equity	$8,885

Forecast Seagate Technologys 2020 income statement using the following forecast assumptions, which are expressed as a percentage of revenue unless otherwise indicated.

Revenue growth	5%
Cost of revenue	71.8%
Product development	9.5%
Marketing and administrative	4.4%
Restructuring and other, net	$0
Income tax expense (% pretax income)	21%

• Forecast no change in the following income statement accounts: Amortization of intangibles, Interest income, Interest expense, and Other, net income.

• Round all answers to the nearest whole number.

• Do not use negative signs with any of your answers in the income statement.

SEAGATE TECHNOLOGY PLC Consolidated Statement of Income ($ millions) For Year Ended	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
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.

Accounts receivable, net	9.5%
Inventories	9.3%
Other current assets	1.8%
Deferred income taxes	10.7%
Other assets, net	1.8%
Accounts payable	13.7%
Accrued employee compensation	1.6%
Accrued warranty	0.9%
Accrued expenses	5.3%
Long-term accrued warranty	1.0%
Other noncurrent liabilities	1.3%

SEAGATE TECHNOLOGY PLC Forecasted 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

b. What does the forecasted adjustment to balance the accounting equation from part a reveal to us about the forecasted cash balance and related financing needs of the company? Explain.

Seagate will generate sufficient cash for the coming year. The cash balance decreases slightly, but not enough to require an adjustment.

Seagate will generate sufficient cash for the coming year. The cash balance increases fairly significantly, we could adjust marketable securities, leaving total assets unchanged.

Seagate will not generate sufficient cash for the coming year. The cash balance decreases fairly significantly, we could adjust marketable securities, leaving total assets unchanged.

Seagate will generate sufficient cash for the coming year. The cash balance increases slightly, but not enough to require an adjustment.

• Forecast no change in the following balance sheet accounts: Goodwill, Long-term accrued income taxes, Long-term debt, less current portion, Ordinary shares, and Accumulated other comprehensive loss.
• Assume that in 2020, CAPEX will be 5.8% of revenue, and depreciation expense will be 5.4% of Property, equipment and leasehold improvements, gross at the start of the year, which was $9,835 million.
• Assume that in 2020, the company awards $99 million of stock-based compensation which increases Additional paid-in capital by the same amount. Assume that the company routinely includes this form of compensation in operating expenses each year.
• The company has a dividend payout ratio of 35.4% of net income.
• Round all answers to the nearest whole number.
• Use a negative sign for your Accumulated other comprehensive loss and Accumulated deficit answers.