HouseholdCo, a large household products firm, recently reported $6.2 billion in accrued and other liabilities and $49 billion in revenues, such that accrued and other liabilities equaled 12.6% of revenues. Using data from the annual report's footnote 4, provided in Exhibit 11.15, discuss why a forecast ratio of 12.6% going forward would distort your forecast of free cash flow. How should the Balance sheet be reorganized to prevent this?

REVIEW QU REVIEW QUESTIONS 1. HouseholdCo, a large household products firm, recently rep' lion in accrued and other liabilities and $49.0 billion in reven accrued and other liabilities equaled 12.6 percent of revenue from the annual report's footnote 4, provided in Exhibit 11.15 a forecast ratio of 12.6 percent going forward would distort of free cash flow. How should the balance sheet be reorganiz this? EXHIBIT 11.15 HouseholdCo: Annual Report Note 4-Supplemental financial information Selected components of current and noncurrent liabilities were as follows: $ million Accrued and other liabilities--current Marketing and promotion Compensation expenses Accrued ShaveCo exit costs Taxes payable Other Total Year 1 2,833.0 1,846.0 456.0 922.0 102.0 6,159.0 Results from severance costs due to acquisition of ShaveCo, a consumer products firm, in prior year. 2. Exhibit 11.16 presents the income statement and balance she, a $1.2 billion supplier of machinery parts. The company i increase revenues by 8 percent annually for the next five ye methodology outlined in Exhibit 11.4 and the template in forecast the next five years of income statements for Par out five years' forecast ratios are identical to this of the nrior year's p 1 REVIEW QU REVIEW QUESTIONS 1. HouseholdCo, a large household products firm, recently rep' lion in accrued and other liabilities and $49.0 billion in reven accrued and other liabilities equaled 12.6 percent of revenue from the annual report's footnote 4, provided in Exhibit 11.15 a forecast ratio of 12.6 percent going forward would distort of free cash flow. How should the balance sheet be reorganiz this? EXHIBIT 11.15 HouseholdCo: Annual Report Note 4-Supplemental financial information Selected components of current and noncurrent liabilities were as follows: $ million Accrued and other liabilities--current Marketing and promotion Compensation expenses Accrued ShaveCo exit costs Taxes payable Other Total Year 1 2,833.0 1,846.0 456.0 922.0 102.0 6,159.0 Results from severance costs due to acquisition of ShaveCo, a consumer products firm, in prior year. 2. Exhibit 11.16 presents the income statement and balance she, a $1.2 billion supplier of machinery parts. The company i increase revenues by 8 percent annually for the next five ye methodology outlined in Exhibit 11.4 and the template in forecast the next five years of income statements for Par out five years' forecast ratios are identical to this of the nrior year's p 1