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7. The income tax rate for Year 4 . j. Purchases of inventories during Year 4 . INTEGRATIVE CASE 10.1 Walmart Walmart Stores, Inc. (Walmart) is the largest retailing firm in the world. Building on a base of discount stores, Walmart has expanded into warehouse clubs and Supercenters, which sell traditional discount store items and grocery products. Exhibits 10.10,10.11, and 10.12 present the financial statements of Walmart for fiscal years 2018-2020. In these exhibits we provide modified Walmart financial statements to facilitate forecasting. Specifically, in Exhibit 10.11 we include on the income statement the adjustment for imputed interest expense on operating lease obligations. In addition, in Exhibit 10.12 , we provide the implied statements of cash flows for fiscal 2019 and 2020 , including implied cash flows for changes in operating lease assets and obligations." for your reference, Exhibits 4.50, 4.51, and 4.52 (Case 4.2 in Chapter 4) present summary financial statements for Walmart based on U.S. GAAP, and Exhibit 4.53 presents selected financial statement ratios for Years 2018-2020. (Note: A few of the amounts presented in Chapter 4 for Walmart differ slightly from the amounts provided here because, for purposes of computing financial analysis ratios, the Chapter 4 data have been adjusted slightly to remove the effects of nonrecurring items such as discontinued operations.) REQUIRED (additional requirements follow on page 632) a. Design a spreadsheet and prepare a set of financial statement forecasts for Walmart for Year +1 to Year +5 using the assumptions that follow. Project the amounts in the order presented (unless indicated otherwise) beginning with the income statement, then the balance sheet, and then the statement of cash flows. For this portion of the case, assume that Walmart will exercise its financial flexibility with the cash and cash equivalents account to balance the balance sheet. Exhibit 10.11 Wolmart Stores, Inc. Income Statements (amounts in millions; allow for rounding) (Integrative Cose 10.1) \begin{tabular}{|c|c|c|c|} \hline & 2018 & 2019 & 2020 \\ \hline Net sales & $514,405 & $523,964 & $559,151 \\ \hline Cost of goods sold & (385,301) & (394,605) & (420,315) \\ \hline Gross & $129,104 & $129,359 & $138,836 \\ \hline Operating, selling, general and administrative expenses & (107,147) & (108,791) & (116,286) \\ \hline Add back imputed interest expense on operating lease obligations & & & 986 \\ \hline Operating Profit & $21,957 & $20,568 & $23,534 \\ \hline Interest income & 217 & 189 & 121 \\ \hline Interest expense on debt & (1,975) & (2,262) & (0,976) \\ \hline Interest on finance leases & (371) & (337) & (339) \\ \hline Subtract: Imputed interest expense on operating lease obligations & 0 & 0 & (966) \\ \hline Other income or gains (Other expenses or losses) & (8,360) & 1,958 & 210 \\ \hline Income before Tax & $11,460 & $20,116 & $20,564 \\ \hline Income tax expense & (4,281) & (4.915) & (6.858) \\ \hline Net Income & $7,179 & $15,201 & $13,706 \\ \hline Net income attributable to noncontrolling interests & (509) & (320) & (196) \\ \hline Net Income attributable to common shareholders & $6,670 & 514881 & $13.510 \\ \hline Other comprehensive income liems & 75 & (1,263) & 1,039 \\ \hline Comprehensive Income & $6,745 & $13,618 & $14549 \\ \hline \end{tabular} \begin{tabular}{|c|c|c|} \hline Exhibit 10.12 & & \\ \hline \begin{tabular}{l} Walmart Stores, Inc. \\ Statements of Cash Flows \\ (amounts in millions, allow for rounding) \\ (Integrative Case 10.1) \end{tabular} & & \\ \hline & 2019 & 2020 \\ \hline Net Income & $15,201 & $13,706 \\ \hline Add back depreciation expense (net) & 8,327 & (1,450) \\ \hline (Increase) Decrease in recelvables - net & (1) & (232) \\ \hline (increase) Decrease in imwentories & (166) & (514) \\ \hline (increase) Decrease in prepaid expenses & 2001 & (19,239) \\ \hline Increase (Decrease) in accounts pryable - trade & (87) & 2.168 \\ \hline Increase (Decrease) in current accrued liablitities & 137 & 15,670 \\ \hline Increase (Decrease) in income taxes payable & (148) & (35) \\ \hline Increase (Decrease) in deferred tax asset and llabilities (net) & 980 & 1,409 \\ \hline Net Cash Flows from Operations & $26,244 & 01,480 \\ \hline \end{tabular} (Continued) Wolmart and acquiring other retailers. In the future, Walmart will likely continue to grow in international markets W. 1 S, markets by converting discount stores \begin{tabular}{|c|c|c|c|} \hline \multicolumn{4}{|c|}{ Exhibit 10.10} \\ \hline \multicolumn{4}{|c|}{\begin{tabular}{l} Walmart Stores, Inc. Balance Sheets \\ (amounts in millions; allow for rounding) \\ (Integrative Case 10.1) \end{tabular}} \\ \hline & 2018 & 2019 & 2020 \\ \hline Assets: & & & \\ \hline Cash and cash equivalents & $7,722 & S 9,465 & S 17,741 \\ \hline Accounts and notes receivable - net & 6,283 & 6,284 & 6,516 \\ \hline Inventories & 44,269 & 44,435 & 44,949 \\ \hline Prepaid expenses and other current assets & 3,623 & 1,622 & 20,861 \\ \hline Current Assets & $61,897 & $61,806 & 590,067 \\ \hline Property, plant, and equipment - at cost & 185,810 & 195,028 & 180,571 \\ \hline (Accumulated depreciation) & (81,493) & (89,820) & (88,370) \\ \hline Operating lease right-of-use assets & 0 & 17,424 & 13,642 \\ \hline Finance lease-right-of-use assets & 7.078 & 4,417 & 4,005 \\ \hline Goodwill & 31,181 & 31,073 & 28,983 \\ \hline Other long-term assets & 14,822 & 16,567 & 23,598 \\ \hline Total Assets & $219,295 & $236,495 & $252.496 \\ \hline Llabilities and Equities: & & & \\ \hline Accounts payable & 547,060 & S 46,973 & S 49,141 \\ \hline Current accrued liabilities & 22,159 & 22,296 & 37,966 \\ \hline Short-term debt & 5,225 & 575 & 224 \\ \hline Maturities of long-term debt due within one year & 1,876 & 5.362 & 3,115 \\ \hline Lease obligations due within one year & 729 & 2,304 & 1,957 \\ \hline Income taxes payable & \begin{tabular}{r} 428 \\ \end{tabular} & 280 & 242 \\ \hline Current Liabilities & S 77,477 & $77,790 & $92,645 \\ \hline Long-term debt obligations & 43,520 & 43,714 & 41,194 \\ \hline Long-term lease obligations & 6,683 & 20,478 & 16,756 \\ \hline Deferred income tax liabilities and other & 11,981 & 12,961 & 14,370 \\ \hline Total Liabilities & $139,661 & $154,943 & $164,965 \\ \hline Common stock + Capital in excess of par value & 3,253 & 3,531 & 3,928 \\ \hline Retained earnings & 80,785 & 83,943 & 88,763 \\ \hline Accumulated other comprehensive losses & (11,542) & (12,805) & (11,766) \\ \hline Total Common Shareholders' Equity & $72,496 & $74,669 & S. 80,925 \\ \hline Noncontrolling interests & 7,138 & 6.883 & 6,606 \\ \hline Total Equity & $79.634 & $81,552 & $87,531 \\ \hline Total Liabilities and Equities & $219,295 & $236,495 & $252,496 \\ \hline \end{tabular} 7. The income tax rate for Year 4 . j. Purchases of inventories during Year 4 . INTEGRATIVE CASE 10.1 Walmart Walmart Stores, Inc. (Walmart) is the largest retailing firm in the world. Building on a base of discount stores, Walmart has expanded into warehouse clubs and Supercenters, which sell traditional discount store items and grocery products. Exhibits 10.10,10.11, and 10.12 present the financial statements of Walmart for fiscal years 2018-2020. In these exhibits we provide modified Walmart financial statements to facilitate forecasting. Specifically, in Exhibit 10.11 we include on the income statement the adjustment for imputed interest expense on operating lease obligations. In addition, in Exhibit 10.12 , we provide the implied statements of cash flows for fiscal 2019 and 2020 , including implied cash flows for changes in operating lease assets and obligations." for your reference, Exhibits 4.50, 4.51, and 4.52 (Case 4.2 in Chapter 4) present summary financial statements for Walmart based on U.S. GAAP, and Exhibit 4.53 presents selected financial statement ratios for Years 2018-2020. (Note: A few of the amounts presented in Chapter 4 for Walmart differ slightly from the amounts provided here because, for purposes of computing financial analysis ratios, the Chapter 4 data have been adjusted slightly to remove the effects of nonrecurring items such as discontinued operations.) REQUIRED (additional requirements follow on page 632) a. Design a spreadsheet and prepare a set of financial statement forecasts for Walmart for Year +1 to Year +5 using the assumptions that follow. Project the amounts in the order presented (unless indicated otherwise) beginning with the income statement, then the balance sheet, and then the statement of cash flows. For this portion of the case, assume that Walmart will exercise its financial flexibility with the cash and cash equivalents account to balance the balance sheet. Exhibit 10.11 Wolmart Stores, Inc. Income Statements (amounts in millions; allow for rounding) (Integrative Cose 10.1) \begin{tabular}{|c|c|c|c|} \hline & 2018 & 2019 & 2020 \\ \hline Net sales & $514,405 & $523,964 & $559,151 \\ \hline Cost of goods sold & (385,301) & (394,605) & (420,315) \\ \hline Gross & $129,104 & $129,359 & $138,836 \\ \hline Operating, selling, general and administrative expenses & (107,147) & (108,791) & (116,286) \\ \hline Add back imputed interest expense on operating lease obligations & & & 986 \\ \hline Operating Profit & $21,957 & $20,568 & $23,534 \\ \hline Interest income & 217 & 189 & 121 \\ \hline Interest expense on debt & (1,975) & (2,262) & (0,976) \\ \hline Interest on finance leases & (371) & (337) & (339) \\ \hline Subtract: Imputed interest expense on operating lease obligations & 0 & 0 & (966) \\ \hline Other income or gains (Other expenses or losses) & (8,360) & 1,958 & 210 \\ \hline Income before Tax & $11,460 & $20,116 & $20,564 \\ \hline Income tax expense & (4,281) & (4.915) & (6.858) \\ \hline Net Income & $7,179 & $15,201 & $13,706 \\ \hline Net income attributable to noncontrolling interests & (509) & (320) & (196) \\ \hline Net Income attributable to common shareholders & $6,670 & 514881 & $13.510 \\ \hline Other comprehensive income liems & 75 & (1,263) & 1,039 \\ \hline Comprehensive Income & $6,745 & $13,618 & $14549 \\ \hline \end{tabular} \begin{tabular}{|c|c|c|} \hline Exhibit 10.12 & & \\ \hline \begin{tabular}{l} Walmart Stores, Inc. \\ Statements of Cash Flows \\ (amounts in millions, allow for rounding) \\ (Integrative Case 10.1) \end{tabular} & & \\ \hline & 2019 & 2020 \\ \hline Net Income & $15,201 & $13,706 \\ \hline Add back depreciation expense (net) & 8,327 & (1,450) \\ \hline (Increase) Decrease in recelvables - net & (1) & (232) \\ \hline (increase) Decrease in imwentories & (166) & (514) \\ \hline (increase) Decrease in prepaid expenses & 2001 & (19,239) \\ \hline Increase (Decrease) in accounts pryable - trade & (87) & 2.168 \\ \hline Increase (Decrease) in current accrued liablitities & 137 & 15,670 \\ \hline Increase (Decrease) in income taxes payable & (148) & (35) \\ \hline Increase (Decrease) in deferred tax asset and llabilities (net) & 980 & 1,409 \\ \hline Net Cash Flows from Operations & $26,244 & 01,480 \\ \hline \end{tabular} (Continued) Wolmart and acquiring other retailers. In the future, Walmart will likely continue to grow in international markets W. 1 S, markets by converting discount stores \begin{tabular}{|c|c|c|c|} \hline \multicolumn{4}{|c|}{ Exhibit 10.10} \\ \hline \multicolumn{4}{|c|}{\begin{tabular}{l} Walmart Stores, Inc. Balance Sheets \\ (amounts in millions; allow for rounding) \\ (Integrative Case 10.1) \end{tabular}} \\ \hline & 2018 & 2019 & 2020 \\ \hline Assets: & & & \\ \hline Cash and cash equivalents & $7,722 & S 9,465 & S 17,741 \\ \hline Accounts and notes receivable - net & 6,283 & 6,284 & 6,516 \\ \hline Inventories & 44,269 & 44,435 & 44,949 \\ \hline Prepaid expenses and other current assets & 3,623 & 1,622 & 20,861 \\ \hline Current Assets & $61,897 & $61,806 & 590,067 \\ \hline Property, plant, and equipment - at cost & 185,810 & 195,028 & 180,571 \\ \hline (Accumulated depreciation) & (81,493) & (89,820) & (88,370) \\ \hline Operating lease right-of-use assets & 0 & 17,424 & 13,642 \\ \hline Finance lease-right-of-use assets & 7.078 & 4,417 & 4,005 \\ \hline Goodwill & 31,181 & 31,073 & 28,983 \\ \hline Other long-term assets & 14,822 & 16,567 & 23,598 \\ \hline Total Assets & $219,295 & $236,495 & $252.496 \\ \hline Llabilities and Equities: & & & \\ \hline Accounts payable & 547,060 & S 46,973 & S 49,141 \\ \hline Current accrued liabilities & 22,159 & 22,296 & 37,966 \\ \hline Short-term debt & 5,225 & 575 & 224 \\ \hline Maturities of long-term debt due within one year & 1,876 & 5.362 & 3,115 \\ \hline Lease obligations due within one year & 729 & 2,304 & 1,957 \\ \hline Income taxes payable & \begin{tabular}{r} 428 \\ \end{tabular} & 280 & 242 \\ \hline Current Liabilities & S 77,477 & $77,790 & $92,645 \\ \hline Long-term debt obligations & 43,520 & 43,714 & 41,194 \\ \hline Long-term lease obligations & 6,683 & 20,478 & 16,756 \\ \hline Deferred income tax liabilities and other & 11,981 & 12,961 & 14,370 \\ \hline Total Liabilities & $139,661 & $154,943 & $164,965 \\ \hline Common stock + Capital in excess of par value & 3,253 & 3,531 & 3,928 \\ \hline Retained earnings & 80,785 & 83,943 & 88,763 \\ \hline Accumulated other comprehensive losses & (11,542) & (12,805) & (11,766) \\ \hline Total Common Shareholders' Equity & $72,496 & $74,669 & S. 80,925 \\ \hline Noncontrolling interests & 7,138 & 6.883 & 6,606 \\ \hline Total Equity & $79.634 & $81,552 & $87,531 \\ \hline Total Liabilities and Equities & $219,295 & $236,495 & $252,496 \\ \hline \end{tabular}