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Prepare a long-term forecast for Fiscal Years 2017 and 2018. Based on the input variables below, Percentage increases should be calculated against the preceding year's
Prepare a long-term forecast for Fiscal Years 2017 and 2018.
Based on the input variables below, 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 AutoSave OFF MA V C... Bettner-Chapter5-MiniProject Process Home Insert Draw Page Layout Formulas Data Review View Acrobat ? Tell me Share Comments fx Define Name v Ey Trace Precedents Calculate Now Trace Dependents Insert AutoSum Recently Financial Logical Text Date & Lookup & Math & More Create from Selection Show Error Watch Calculation Calculate Sheet Function Used Time Reference Trig Functions Remove Arrows v Formulas Checking Window Options G6 X fx 45722 A B D E F G H J K L Current Year Year-2 Year 3 Input Variables Actual Projections Projections Figure 5.2: Income Statement Forecast Increase in Net Sales 10% 18% 2016 2017 2018 W N ods Sold - % of Net Sales 60% 60% 60% Net sales $ 215,600 $ 237,160 $ 279,849 Cost of goods sold 129,364 42,296 67,909 5 SG&A Expenses 28% 20% Gross profit $ 86,236 4,864 11,940 6 advertising 15% 18% Selling and administrative expenses 45,722 58,774 70,529 7 impairment charges 1% 1% Advertising 4,258 16,397 19,348 8 on and amortization 5400 6500 Depreciation and amortization 3,998 5,400 6,500 Impairment charges 3,015 3,045 3,075.6 10 x Rate 45.0% 45.5% 46.0% Depreciation expense 40,000 55,000 55,000 11 Loss on Sale of Land 15,000 12 ew inventory tracking software 250 13 14 15 16 come 422 500 500 17 pense -2585 -2750 -3000 18 Receivable Turnover (Times per Year) 5 6 Operating profit $ 19,243 $ 11,248 $ 12,487 19 Turnover (Times per Year) A Interest expense (2,585) 2,750 (3,000) 20 able Turnover (Times per Year) 6 12 Earnings before income taxes $ 7,080 ,248 10,287 21 Provision for income taxes 7,686 4,208 4,732 22 Cost of Land Sold $ $ 40,000 $ Net Income $ ,394 $ 5,040 $ 5,555 23 eeds from Sale of Land 25,000 16,658 $ 8,498 24 le of Land $ - $ 15,000 $ 25 26 Computer System $ $ 120,000 $ 27 28 on - Building, Fixtures & Equipment 40,000 $ 55,000 $ 55,000 29 30 ice Cost of Long-Term Note Payable $ 48,000 $ 48,000 $ 48,000 31 rtion of Debt Service Payment 15,000 12,000 10,000 32 Portion of Debt Service Payment 33,000 $ 36,000 $ $8,000 33 34 nmon Stock 50,000 $ $ 35 Set-Up Solved + Ready + 120%Step by Step Solution
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