Forecast the Income Statement, Balance Sheet, and Statement of Cash Flows

Following are fiscal year financial statements of Costco.

COSTCO WHOLESALE CORP

Consolidated Statements of Income

For Year Ended $($$ millions$)$ Sep. $1,2019$ Sep. $2,2018$

Net sales $$179,221$ $$166,121$

Membership fees $4,0223,770$

Total revenue $183,243169,891$

Merchandise costs $159,463147,782$

Selling, general and administrative $17,99316,651$

Preopening expenses $10382$

Operating income $5,6845,376$

Interest expense $(180)(191)$

Interest income and other, net $214145$

Income before income taxes $5,7185,330$

Provision for income taxes $1,2731,516$

Net income including noncontrolling interests $4,4453,814$

Net income attributable to noncontrolling interests $(54)(54)$

Net income attributable to Costco $$4,391$ $$3,760$

COSTCO WHOLESALE CORP

Consolidated Balance Sheets

In millions, except par value Sep. $1,2019$ Sep. $2,2018$

Current Assets

Cash and cash equivalents $$10,062$ $$7,265$

Short$-$term investments $1,2721,445$

Receivables, net $1,8422,003$

Merchandise inventories $13,67413,248$

Other current assets $1,333385$

Total current assets $28,18324,346$

Property and Equipment

Land $7,7007,432$

Buildings and improvements $20,56319,328$

Equipment and fixtures $9,3618,729$

Construction in progress $1,5261,368$

Gross property and equipment $39,15036,857$

Less accumulated depreciation and amortization $(14,083)(13,240)$

Net property and equipment $25,06723,617$

Other assets $1,2301,032$

Total assets $$54,480$ $$48,995$

Current Liabilities

Accounts payable $$14,015$ $$13,484$

Accrued salaries and benefits $3,8113,593$

Accrued member rewards $1,4161,268$

Deferred membership fees $2,0531,949$

Current portion of long$-$term debt $2,039108$

Other current liabilities $4,5503,509$

Total current liabilities $27,88423,911$

Long$-$term debt, excluding current portion $6,1497,784$

Other liabilities $1,7461,577$

Total liabilities $35,77933,272$

Equity

Preferred stock $$\mathrm{.}01$ par value;

$100,000,000$ shares authorized$*$

Common stock $$0\mathrm{.}01$ par value;

$900,000,000$ shares authorized$**55$

Additional paid$-$in capital $7,7007,328$

Accumulated other comprehensive loss $(1,723)(1,439)$

Retained earnings $12,3109,464$

Total Costco stockholders' equity $18,29215,358$

Noncontrolling interests $409365$

Total equity $18,70115,723$

Total liabilities and equity $$54,480$ $$48,995$

$*$no shares issued and outstanding

$**527,550,000$ and $525,826,800$ shares issued and outstanding

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.

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

$$ Receivables, net

$$ Merchandise inventories

$$ Accounts payable

$$ Accrued member rewards

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

$$ Interest expense

$$ Interest income

$$ Net income attributable to noncontrolling interest

$$ Short$-$term investments

$$ Preferred stock

$$ Common stock

$$ Accumulated other comprehensive loss

Debt maturing in fiscal $2020$ and $2021$ is $$2,039$ million and $$1,313$ million, respectively.

The company anticipates repurchasing $$300$ million in common stock in fiscal $2020.$

The $2019$ statement of cash flows reports the following:

$$ Depreciation expense of $$1,790$ million

$$ Dividends of $$1,246$ million $($to forecast $2020$ dividends, use the $2019$ dividend payout ratio as a percentage of net income attributable to Costco shareholders$)$

$$ Stock$-$based compensation $($a noncash expense that is included in SG&A expense and is added to Additional paid$-$in capital$)$ of $$714$ million

$$ CAPEX of $$3,598$ million

Forecast all other items as a percentage of total revenues.

Note: Round historical rates used in calculations to three decimal places. For example, assume that Actual Merchandise inventories divided Actual Net sales equals $0\mathrm{.}076297.$ This factor should be rounded to $7\mathrm{.}6\%$ before computing your forecasted amount for Merchandise inventories.

Note: Round your final answers below to the nearest whole dollar.

COSTCO WHOLESALE CORP

Forecasted Income Statement

For the year ended

Sep. $01,2020$

$ millions Forecast

Net sales Answer

$0$

Membership fees Answer

$0$

Total revenues Answer

$0$

Expenses

Merchandise cost Answer

$0$

Selling, general and administrative Answer

$0$

Preopening expenses Answer

$0$

Operating income Answer

$0$

Interest expense Answer

$0$

Interest income and other, net Answer

$0$

Income before income taxes Answer

$0$

Provision for income taxes Answer

$0$

Net income including noncontrolling interests Answer

$0$

Net income attributable to noncontrolling Answer

$0$

Net income attributable to Costco Answer

$0$