MVIDIA Corporation Balance Sheet ($ in Millions) For the Years 2014 to 2019 Jan-19 Jan-18 Jan-17 Jan-16 Jan-15 Jan-14 Assets Cash Short-Term Investments Accounts Receivable Inventories Other Current Assets Total Current Assets Gross Plant & Equipment Accumulated Depreciation 1,766 596 497 1,151 431 253 5,032 4,441 4,127 3,521 3,297 2,876 826 505 474 426 454 336 794 418 483 388 420 340 118 93 133 139 173 99 8,536 6,053 5,713 5,625 4,775 3,905 1,191 1,100 1,179 1,283 1,289 1,157 670 634 622 700 713 596 Net Plant & Equipment 521 466 557 583 576 560 Other Assets 784 851 931 1,043 1,061 1,087 Total Assets 9,841 7,370 7,201 7,251 6,412 5,553 Liabilities & Shareholders' Equity ST Debt & Current Portion LT Debt 800.0 1,413.0 0.0 2.9 0.0 0.0 Accounts Payable 485.0 296.0 293.2 324.4 356.4 335.1 Other Current Liabilities 503.0 642.0 602.8 621.1 619.8 594.9 Total Current Liabilities 1,788.0 2,351.0 896.0 948.4 976.2 930.0 Long-Term Debt 2,020 97 1,398 1,371 19 21 Other Liabilities Total Liabilities 271 453 489 475 589 456 4,079 2,901 2,783 2,794 1,585 1,407 Common Equity Total Liabilities & Shareholders' Equity 5,762 4,469 4,418 4,456 4,828 4,146 9,841 7,370 7,201 7,251 6,412 5,553 a) Use your judgement to forecast the items on the income statement and balance sheet with the percent of sales method. What is the discretionary financing needed in 2020? Is this a surplus or deficit? Assume that the dividends per share will be $0.54 and the number of shares will be the same as in 2019 (Analysis & Identify and Access Needed Information 8 pts). b) Assume that DFN will be absorbed by long-term debt and that the interest rate is 2.5% of the sum of LTD and short-term debt. Set up an iterative worksheet to eliminate it (Analysis, Identify and Access Needed Information, & Use Information Effectively to Accomplish a Specific Purpose 12 pts). c) Interpretation: please describe where you obtained information to develop analyses and interpret the results. Please include your written description in the "interpretation" tab. If you do not complete this section with your words or leave the interpretation tab as a blank, you receive 0 point in this HW. Please complete the yellow highlighted parts. Please show the formulas if the number or figures are not provided in the problem. MVIDIA Corporation Income Statement ($ in Millions) For the Years 2014 to 2019 Jan-20* Jan-19 Jan-18 Jan-17 Jan-16 Jan-15 Jan-14 Sales 8,260 6,910 5,010 4,682 4,130 4,280 3,998 Cost of Goods Sold 2,648 2,002 1,862 1,623 1,828 1,743 Gross Income 4,262 3,008 2,820 2,507 2,453 2,255 Research & Development Other SG&A Depreciation Expense 1,463 1,331 1,360 1,336 1,147 984 641 532 443 436 431 398 187 197 220 239 226 204 Other Operating Expense 2 0 0 0 0 0 EBIT (Operating Income) 1,969 948 796 496 648 669 Nonoperating Income - Net 50 43 42 24 17 Interest Expense 58 47 46 10 3 Unusual Expense - Net 56 201 37 0 0 739 Pretax Income 1,905 743 755 510 662 663 Income Taxes Net Income 239 129 124 70 100 82 1,666 614 631 440 563 581 Dividends per Share Tax Rate * Forecast Interest Rate 0.54 0.49 17.35% 12.55% 0.40 17.36% 16.46% 0.34 0.31 0.08 0.00 13.77% 15.03% 12.41% 2.50% FactSet 2020 Revenue Forecast 8260 FactSet 2020 Tax Rate Forecast 17.35% FactSet 2018 R&D Forecast 1713 Sales Multiplier for Scenarios DFN for Scenarios 100% Please complete the yellow highlighted parts. Please show the formulas if the number or figures are not provided in the problem. MVIDIA Corporation Balance Sheet ($ in Millions) For the Years 2014 to 2019 Assets Cash & Short-Term Investments Short-Term Investments Accounts Receivable Inventories Other Current Assets Total Current Assets Gross Plant & Equipment Accumulated Depreciation Net Plant & Equipment Other Assets Total Assets Liabilities & Shareholders' Equity ST Debt & Current Portion LT Debt Accounts Payable Other Current Liabilities Total Current Liabilities Long-Term Debt Jan-20* Jan-19 Jan-18 Jan-17 Jan-16 Jan-15 Jan-14 1,766 596 497 1,151 431 253 5,032 4,441 4,127 3,521 3,297 2,876 826 505 474 426 454 336 794 418 483 388 420 340 118 93 133 139 173 99 8,536 6,053 5,713 5,625 4,775 3,905 1,191 1,100 1,179 1,283 1,289 1,157 670 634 622 700 713 596 521 466 557 583 576 560 784 851 931 1,043 1,061 1,087 9,841 7,370 7,201 7,251 6,412 5,553 800.0 1,413.0 0.0 2.9 0.0 0.0 485.0 296.0 293.2 324.4 356.4 335.1 503.0 642.0 602.8 621.1 619.8 594.9 1,788.0 2,351.0 896.0 948.4 976.2 930.0 2,020 97 1,398 1,371 19 21 Liabilities & Shareholders' Equity ST Debt & Current Portion LT Debt Accounts Payable Other Current Liabilities Total Current Liabilities Long-Term Debt Other Liabilities Total Liabilities Common Equity Total Liabilities & Shareholders' Equity Shares Outstanding Discretionary Financing Needed Accumulated DFN Iteration Source: FactSet Fundamentals 800.0 1,413.0 485.0 296.0 293.2 324.4 0.0 2.9 0.0 0.0 356.4 335.1 503.0 642.0 602.8 621.1 619.8 594.9 1,788.0 2,351.0 896.0 948.4 976.2 930.0 2,020 97 1,398 1,371 19 21 271 453 489 475 589 456 4,079 2,901 2,783 2,794 1,585 1,407 5,762 4,469 4,418 4,456 4,828 4,146 9,841 7,370 7,201 7,251 6,412 5,553 649 649 569 563.07 594.52 624.96 616.37 Surplus or Deficit? MVIDIA Corp. financial statements are presented below. Analysts forecast that its 2020 sales will be $8,260. The expected 2020 tax rate will be 17.35%. Assume the firm pays 5% interest on short- term debt and 7% on long term debt. MVIDIA Corporation Income Statement ($ in Millions) For the Years 2014 to 2019 Jan-19 Jan-18 Jan-17 Jan-16 Jan-15 Jan-14 Sales 6,910 5,010 4,682 4,130 4,280 3,998 Cost of Goods Sold 2,648 2,002 1,862 1,623 1,828 1,743 Gross Income 4,262 3,008 2,820 2,507 2,453 2,255 Research & Development 1,463 1,331 1,360 1,336 1,147 984 Other SG&A 641 532 443 436 431 398 Depreciation Expense 187 197 220 239 226 204 Other Operating Expense 2 0 0 0 0 0 EBIT (Operating Income) Nonoperating Income - Net Interest Expense 1,969 948 796 496 648 669 50 43 42 24 17 7 58 47 46 10 3 3 +3 Unusual Expense - Net 56 201 37 0 0 9 Pretax Income 1,905 743 755 510 662 663 Income Taxes 239 129 124 70 100 82 Net Income 1,666 614 631 440 563 581 Dividends per Share 0.49 0.40 0.34 0.31 0.08 0.00 Shares Outstanding 649.00 569.00 563.07 594.52 624.96 616.37 Tax Rate 12.55% 17.36% 16.46% 13.77% 15.03% 12.41%