Prepare a long-term forecast for Fiscal Years 2017 and 2018

Directions: Based on the input variables below, prepare a long-term forecast for Fiscal Years 2017 and 2018. Percentage increases should be calculated against the preceding year's values. For example, the 2018 selling and administrative expenses should be estimated based on the values calculated for 2017. The purchase of inventory tracking software is an selling and administrative expenses.

Current Year-2 Input Variables Year Projections Percentage increase in net sales 10% Cost of goods sold - % of net sales 60% 60% Increase in selling and administrative expenses 28% Increase in advertising 15% Increase in impairment charges 1% Income tax rate 45.5% Purchase new inventory tracking software 250 Depreciation and amortization 5,400 Interest income 500 Interest expense 2,750 Sage Inc. Consolidated Statements of Earnings for the Years Ended December 31, 2016 (in Thousands) 2016 Net sales '5 215,600 Cost of goods sold 129,364 Gross prot 86,236 Selling and administrative expemses 45,722 Advertising 14,258 Depreciation and amortization 3,998 Impairment charges 3,015 Operating prot 19,243 Other income (expense) Interest income 422 Interest expense (2,585) Earnings before income taxes 17,080 Provision for income taxes 7,686 Net earnings '5 9,394 Year-3 Projections