Question
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
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 | $149,351 | $138,434 | |
Membership fees | 3,352 | 3,142 | |
Total revenue | 152,703 | 141,576 | |
Merchandise costs | 132,886 | 123,152 | |
Selling, general and administrative | 14,994 | 13,876 | |
Preopening expenses | 86 | 68 | |
Operating income | 4,737 | 4,480 | |
Interest expense | (150) | (159) | |
Interest income and other, net | 178 | 121 | |
Income before income taxes | 4,765 | 4,442 | |
Provision for income taxes | 1,061 | 1,263 | |
Net income including noncontrolling interests | 3,704 | 3,179 | |
Net income attributable to noncontrolling interests | (45) | (45) | |
Net income attributable to Costco | $3,659 | $3,134 |
COSTCO WHOLESALE CORP | ||
---|---|---|
Consolidated Balance Sheets | ||
In millions, except par value | Sep. 1, 2019 | Sep. 2, 2018 |
Current Assets | ||
Cash and cash equivalents | $8,384 | $6,055 |
Short-term investments | 1,060 | 1,204 |
Receivables, net | 1,535 | 1,669 |
Merchandise inventories | 11,395 | 11,040 |
Other current assets | 1,111 | 321 |
Total current assets | 23,485 | 20,289 |
Property and Equipment | ||
Land | 6,417 | 6,193 |
Buildings and improvements | 17,136 | 16,107 |
Equipment and fixtures | 7,801 | 7,274 |
Construction in progress | 1,272 | 1,140 |
Gross property and equipment | 32,626 | 30,714 |
Less accumulated depreciation and amortization | (11,736) | (11,033) |
Net property and equipment | 20,890 | 19,681 |
Other assets | 1,025 | 860 |
Total assets | $45,400 | $40,830 |
Current Liabilities | ||
Accounts payable | $11,679 | $11,237 |
Accrued salaries and benefits | 3,176 | 2,994 |
Accrued member rewards | 1,180 | 1,057 |
Deferred membership fees | 1,711 | 1,624 |
Current portion of long-term debt | 1,699 | 90 |
Other current liabilities | 3,792 | 2,924 |
Total current liabilities | 23,237 | 19,926 |
Long-term debt, excluding current portion | 5,124 | 6,487 |
Other liabilities | 1,455 | 1,314 |
Total liabilities | 29,816 | 27,727 |
Equity | ||
Preferred stock $.01 par value; | ||
100,000,000 shares authorized* | ||
Common stock $0.01 par value; | ||
900,000,000 shares authorized** | 4 | 4 |
Additional paid-in capital | 6,417 | 6,107 |
Accumulated other comprehensive loss | (1,436) | (1,199) |
Retained earnings | 10,258 | 7,887 |
Total Costco stockholders' equity | 15,243 | 12,799 |
Noncontrolling interests | 341 | 304 |
Total equity | 15,584 | 13,103 |
Total liabilities and equity | $45,400 | $40,830 |
*no shares issued and outstanding ** 439,625,000 and 438,189,000 shares issued and outstanding
Required Forecast Costcos 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 $1,699 million and $1,094 million, respectively. The company anticipates repurchasing $250 million in common stock in fiscal 2020. The 2019 statement of cash flows reports the following: Depreciation expense of $1,492 million Dividends of $1,038 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 $595 million CAPEX of $2,998 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 0.076297. This factor should be rounded to 7.6% before computing your forecasted amount for Merchandise inventories. Note: Round your final answers below to the nearest whole dollar.
COSTCO WHOLESALE CORP | |
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Forecasted Income Statement | |
For the year ended | |
Sep. 01, 2020 | |
$ millions | Forecast |
Net sales |
|
Membership fees |
|
Total revenues |
|
Expenses | |
Merchandise cost |
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Selling, general and administrative |
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Preopening expenses |
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Operating income |
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Interest expense |
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Interest income and other, net |
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Income before income taxes |
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Provision for income taxes |
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Net income including noncontrolling interests |
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Net income attributable to noncontrolling |
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Net income attributable to Costco |
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COSTCO WHOLESALE CORP | |
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Balance Sheet | |
Sep. 01, 2020 | |
$ millions | Forecast |
Cash and cash equivalents |
|
Short-term investments |
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Receivables, net |
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Merchandise inventories |
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Other current assets |
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Total current assets |
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Net property and equipment |
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Other assets |
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Total assets |
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Accounts payable |
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Accrued salaries and benefits |
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Accrued member rewards |
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Deferred memberships fees |
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Current portion of long-term debt |
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Other current liabilities |
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Total current liabilities |
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Long term debt, excluding current portion |
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Other liabilities |
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Total liabilities |
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Preferred stock |
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Common stock |
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Additional paid-in capital |
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Accumulated other comprehensive loss |
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Retained earnings |
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Treasury stock |
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Total Costco stockholders' equity |
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Noncontrolling interests |
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Total equity |
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Total liabilities and equity |
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COSTCO WHOLESALE CORP | |
---|---|
Forecasted Statement of Cash Flow | |
For the Year ended | Sep. 01, 2020 |
$ millions | Forecast |
Net income including noncontrolling interests |
|
Add: Depreciation |
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Add: Stock-based compensation |
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Receivables, net |
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Merchandise inventories |
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Other current assets |
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Other assets |
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Accounts payable |
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Accrued salaries and benefits |
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Accrued member rewards |
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Deferred membership fees |
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Other current liabilities |
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Other liabilities |
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Net cash from operating activities |
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Capital Expenditures |
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Net cash from investing activities |
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Dividends |
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Change in current maturities of L-T debt |
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Change in L-T Debt |
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Stock repurchases |
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Net cash from financing activities |
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Net change in cash |
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Beginning cash |
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Ending cash |
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