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4/14/2020 Module 11 Forecasting Financial Statements E11.28.Stat Question 1 Answer saved Marked out of 42.00 Analyzing, Forecast, and Interpret Income Statement and Balance Sheet Following are the income statement and balance sheet of Whole Foods Market Inc. WHOLE FOODS MARKET INC. Consolidated Statement of Operations Fiscal Years Ended (in millions) Sales Sept 25, 2016 Sept 27, 2015 $15,724 $15,389 10,313 9,973 5,411 5,416 4,477 4,472 Pre-opening expenses 64 67 Relocation, store closures and lease termination costs 13 16 857 861 (41) - 11 17 827 878 320 342 $507 $536 Cost of goods sold and occupancy costs Gross prot Selling, general and administrative expenses Operating income Interest expense Investment and other income Income before income taxes Provision for income taxes Net Income WHOLE FOODS MARKET INC. Consolidated Balance Sheet (In millions) Sept 25, 2016 Sept 27, 2015 Assets Current assets Cash and cash equivalents $351 $237 Short-term investments-available-for-sale securities 379 155 Restricted cash 122 127 Accounts receivable 242 218 Merchandise inventories 517 500 Prepaid expenses and other current assets 167 108 Deferred income taxes 197 199 1,975 1,544 3,442 3,163 - 63 710 710 74 79 100 144 40 38 $6,341 $5,741 $3 $3 Accounts payable 307 295 Accrued payroll, bonus and other benets due team members 407 436 43 45 581 473 1,341 1,252 1,048 62 640 587 88 71 3,117 1,972 2,933 2,904 (2,026) (1,124) (32) (28) 2,349 2,017 3,224 3,769 $6,341 $5,741 Total current assets Property and equipment, net Long-term investments--available-for-sale securities Goodwill Intangible assets, net Deferred income taxes Other assets Total assets Liabilities and shareholders' equity Current liabilities Current installments of long-term debt& capital lease obligations Dividends payable Other current liabilities Total current liabilities Long-term debt& capital lease obligations, less current installments Deferred lease liabilities Other long-term liabilities Total liabilities Shareholders' equity Common stock, no par value, 1,200 shares authorized;377.0 and 377.1 shares issued; 318.3 and 348.9 share outstanding at 2016 and 2015, respectively Common stock in treasury, at cost, 58.7 and 28.2 shares at 2016 and 2015, respectively Accumulated other comprehensive income loss Retained earnings Total shareholders' equity Total liabilities and shareholders' equity (a.) Forecast the 2017 income statement for Whole Foods using the following forecast assumptions, which are expressed as a percentage of sales unless otherwise noted (assume "no change" for accounts not listed). ($ millions) https://mybusinesscourse.com/platform/mod/quiz/attempt.php?attempt=3540202&cmid=211362 1/3 4/14/2020 Module 11 Forecasting Financial Statements Sales growth 1% Cost of good sold and occupancy costs 65.6% Selling, general and administrative expenses 28.5% Pre-opening expenses 0.4% Relocation, store closures and lease termination costs $0 No Interest expense change No Investment and other income change Provision for income taxes/Pretax income 37% Round all answers to the nearest whole number. Do not use negative signs with your answers. Whole Foods Market, Inc. Forecasted Statement of Operations ($ millions) Sales 2017 Estimated $ 15,881 10,418 Cost of goods sold and occupancy costs Selling, general and administrative expenses 4,526 Pre-opening expenses 64 Relocation, store closures and lease termination costs 0 Operating income 874 Interest expense (41) Investment and other income 11 Income before income taxes 844 Provision for income taxes 312 Net income $ 532 (b.) Forecast the 2017 balance sheet for Whole Foods using the following forecast assumptions ($ in millions). Accounts receivable/Sales 1.8% Merchandise inventories/Sales 3.3% Prepaid expenses and other current assets/Sales 1.1% Deferred income taxes (current assets)/Sales 1.3% Deferred income taxes (noncurrent assets)/Sales 0.6% Accounts payable/Sales 2.0% Accrued payroll, bonus and other benets due team members/Sales 2.6% Other current liabilities/Sales 3.7% Depreciation expense as a percentage of PPE, net, at start of the year CAPEX and development of new properties (all PPE) as a percentage of Sales Amortization of intangible assets Dividends payable as a percentage of dividends 15.0% 5.0% $6 25.0% Long-term debt repayment due in 2017 $3 Long-term debt repayment due in 2018 $65 Increase in treasury stock in 2017 Dividends as percentage of net income $200 30.0% Assume no change for goodwill, other assets, deferred lease liabilities, other long-term liabilities, common stock, and AOCL. Round answers to the nearest whole number. Do not use negative signs with your answers. https://mybusinesscourse.com/platform/mod/quiz/attempt.php?attempt=3540202&cmid=211362 2/3 4/14/2020 Module 11 Forecasting Financial Statements Whole Foods Market, Inc. Forecasted Balance Sheet, ($ millions) 2017 Estimated Current assets Cash and cash equivalents $ 351 Short-term investments 379 Restricted cash 122 Accounts receivable 283 Merchandise inventories 519 Prepaid expenses 173 Deferred income taxes 204 Total current assets 2,031 Property and equipment, net 3,442 Long-term investments 0 Goodwill 710 Intangible assets, net 74 Deferred income taxes 94 Other assets 40 Total assets $ 6,391 $ 3 Current liabilities Current installments of long-term debt Accounts payable 314 Accrued payroll, bonus and benets 409 43 Dividends payable 582 Other current liabilities Total current liabilities 1,351 Long-term debt and capital leases 1,048 Deferred lease liabilities 640 Other long-term liabilities 88 Total liabilities 3,127 Shareholders' equity: 2,933 Common stock, no par value (2,026) Common stock in treasury (32) Accumulated other comprehensive loss Retained earnings 2,349 Total shareholders' equity 3,224 Total liabilities and equity $ 6,351 https://mybusinesscourse.com/platform/mod/quiz/attempt.php?attempt=3540202&cmid=211362 3/3