Coca-Cola Comparative income statements and balance sheets for Coca-Cola are shown below ($ millions). Year 2 Year 1 Sales growth..... Gross profit margin... Income Statement Net sales.. Cast of goods Gross profit... Selling general, and administrative expense Depreciation and amortization expense Interest expense (revenue) Income before tax Income tax expense. Net income.. Outstanding shares $20,092 6,044 14,048 7,893 803 (308) 5,660 1,691 $ 3,969 $19,889 6,204 13,685 9,221 773 292 3,399 1,222 $ 2,177 3,481 Requirement:Use the following ratios to prepare a projected income statement and balance sheet a 1.02% b 69.92% Selling, general, and administrative expense/Sales 39.28% Depreciation expense/Prior-year PPE gross d 12.14% Ratios you may need Interest expense/Prior-year long-term debt 5.45% e Income tax expense/Pretax income 29.88% f Accounts receivable turnover 10.68 g Inventory turnover 5.73 h Accounts payable turnover 1.64 i Taxes payable/Tax expense 50.33% i Total assets/Stockholders' equity (financial leverage). 2.06 k Dividends per share..... $ 1.37 1 Capital expenditures/Sales 5.91% 3,491 Year 2 Year 1 $ 1,892 1,757 1,066 1,905 6,620 1. 1. 2. 2 6,614 2,446 4,168 10,046 3. Projecting Income Statement *Important: Round all numbers to dollar Project Net sales (use ratio a) 20297 Project Gross Profit (use your answer in 1 and ratio b) 14191 Project COGS (use your answers in 1 and 2) 6106 Project SG&A expenses (use your answer in 1 and ratio c) 7892 Project Depreciation expense (use year 2 gross PPE and ratio d) 863 Project Interest expense (use year 2 long-term debt and ratio e) 3 Total assets...... $20,834 4. Balance Sheet Cash $ 1,934 Receivables 1,882 Inventories 1,055 Other current assets 2,300 Total current assets 7,171 Property, plant, and equipment 7,105 Accumulated depreciation 2,652 Net property, plant, and equipment, 4,453 Other noncurrent assets..... 10,793 $22,417 Accounts payable and accrued liabilities ................... $3,679 Short-term debt and current maturities of long-term debt... 3,899 Income tax liabilities...... 851 Total current liabilities.. 8,429 Deferred income taxes and other liabilities 1,403 Long-term debt... 1,219 Total noncurrent liabilities 2,622 Common stock 873 Capital surplus 3,520 Retained earnings. 20,655 Treasury stock...... 13,682 Shareholders' equity 11,366 Total liabilities and equity $22,417 4. 5. $ 3,905 4,816 600 9,321 6 5. 3 6 1,362 835 2,197 870 3,196 18,543 13,293 9,316 $20,834 8 68 Calculate "Income before income tax" (Using answers from above) 5422 Project "Income tax expense" (using ratiof) 1620 Calculate "Net income" (Based on answers from above) 3802 5 9 8 9 10 11 12 Q1 Q2 Q3 A A DONOT USE or delete + Projecting Balance Sheet *Important: Round all numbers to dollar Project A/R (based on sales and ratio g) 1. Project Inventories (based on COGS and ratio h) 3 Project Other current asests (assume no change) 4. Project PP&E Projected PPE = Year 2 PPE + Capital expenditure (ratio L) 7105 5. Project Accumulated Depreciation 6 Calculate Net PPE (use answer in 4 and 5) 3 Other Long-term assets (assume no change) 00 Project A/P and other accrued liabilities (based on COGS and ratio I) Project short-term debt and Current portion of long-term debt (assume same as year 2) 10 Project Income tax liabilities (ratio J) 11 Project Deferred income tax & other (assume no change) 12 Project Long-term debt (assume same as year 2) 13 Project Common stock (assume no change) 14 Project capital surplus (assume no change) 15 Project retained earnings projected R/E = Year 2 R/E + Projected N/ - Projected dividend (ratio K and year 2 outstanding shares) 16 Treasury stock (assume no change) 9 Project short-term debt and Current portion of long-term debt (assume same as year 10 Project Income tax liabilities (ratio J) 11 Project Deferred income tax & other (assume no change) 12 Project Long-term debt (assume same as year 2) 13 Project Common stock (assume no change) 14 Project capital surplus (assume no change) 15 Project retained earnings projected R/E = Year 2 R/E + Projected N/A Projected dividend (ratio K and year 2 outstanding shares) 16 Treasury stock (assume no change) 17 Cash (amount needed to balance total liabilities and equity)