Compute the 2016 forecast Retained Earnings Balance

Assume a forecast asset turnover ratio of 0.75 in 2016 that will grow by .05 turns in each of the following 4 years and then will stabilize after that. The projected sales growth is 12.2% in 2016, 12.9% in 2017, 10.2% in 2018, 9.2% in 2019 and then 6.5% thereafter for AMAT. The forecast 2016 gross profit margin is 40.5% and it is budgeted to drop by 0.5% per year until it reaches at target 39% level. Finally, assume that net profit margin is forecast to be 10% for the next 5 years. Assume a stable net profit margin of 13% and a dividend payout ratio of 35%