Question
Forecast the June 30, 2014, income statement and balance sheet for Procter & Gamble. Use the percent of sales method and the following assumptions 1)
Forecast the June 30, 2014, income statement and balance sheet for Procter & Gamble. Use the percent of sales method and the following assumptions" 1) Sales in FY 2014 will be $85,000; 2) The tax rate will be 25.24%; 3) Each item that changes with sales will be the five-year average percentage of sales; 4) No preferred dividends will be paid; and 5) The common dividend payout ratio will be 50% of income available to common stockholdres. Use your judgement on all other items.
PROCTER & GAMBLE CO (PG) | ||||||
Income Statement | ||||||
For the Fiscal Years Ending June 2009 to 2013 | ||||||
2014* | 2013 | 2012 | 2011 | 2010 | 2009 | |
Revenue | 85,000 | 84,167 | 83,680 | 82,559 | 78,938 | 79,029 |
Cost of revenue | 42,428 | 42,391 | 40,768 | 37,919 | 38,898 | |
Gross profit | 41,739 | 41,289 | 41,791 | 41,019 | 40,131 | |
Sales, General and administrative | 26,950 | 26,421 | 25,973 | 24,998 | 24,008 | |
Other operating expenses | 308 | 1,576 | - | - | - | |
Operating income | 14,481 | 13,292 | 15,818 | 16,021 | 16,123 | |
Interest Expense | 667 | 769 | 831 | 946 | 1,358 | |
Other income (expense) | 1,029 | 262 | 202 | (28) | 560 | |
Income before taxes | 14,843 | 12,785 | 15,189 | 15,047 | 15,325 | |
Provision for income taxes | 3,441 | 3,468 | 3,392 | 4,101 | 4,032 | |
Net income from continuing operations | 11,402 | 9,317 | 11,797 | 10,946 | 11,293 | |
Net income from discontinuing ops | - | 1,587 | - | 1,790 | 2,143 | |
Other | (90) | (148) | - | - | - | |
Net income | 11,312 | 10,756 | 11,797 | 12,736 | 13,436 | |
*Forecast | ||||||
Preferred dividend | - | - | 233 | 219 | 192 | |
Net income available to common shareholders | 11,312 | 10,756 | 11,564 | 12,517 | 13,244 | |
Common dividends | 6,519 | 6,139 | 5,767 | 5,458 | 5,044 | |
Earnings per share: | ||||||
Basic | 4.04 | 3.82 | 4.12 | 4.32 | 4.49 | |
Diluted | 3.86 | 3.66 | 3.93 | 4.11 | 4.26 | |
Weighted average shares outstanding: | ||||||
Basic | 2,743 | 2,751 | 2,804 | 2,901 | 2,952 | |
Diluted | 2,931 | 2,941 | 3,002 | 3,099 | 3,154 | |
EBITDA | 18,492 | 16,758 | 18,858 | 19,101 | 19,765 | |
Source: Morningstar Direct (retrieved 24 February 2014) | ||||||
Fiscal year ends in June. USD in millions except per share data. |
C. Create a chart of cash vs. sales and add a linear trend line. Is the cash balance a consistent percentage of sales? Does the relationship fit your expectations? D. Use the regression tool to verify your seults from part c. Is the trend statistically significant? Use at least three methods to show why or why not.
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