Problem 1 (20pts) Appendix A contains the financial statements of Home Depot Inc. for fiscal year ended January 31, 2016. Forecast the FY2016 income statement and balance sheet of Home Depot using the set of assumptions and requirements outlined below. Round all $ forecasts to millions. Use average historical revenue growth rate to forecast revenue (round the rate to nearest whole percent). Assume no change for goodwill, interest and investment income, interest expense, short-term debt, common stock and paid-in capital, and accumulated other comprehensive loss. Capital expenditures were $1,503 million, and dividends were $3,031 million for 2015. Forecast depreciation as a percentage of net PP&E at the start of the year. Use the historical FY2015 (FY ended January, 2016) rate to forecast FY2016. HD's long-term debt footnote indicates maturities of long-term debt of $110 million for fiscal 2017. Assume that Income Taxes Payable is 0. Assume the company will repurchase $4 billion of common stock in the coming year. Estimate forecast assumptions for balance sheet and income statement items other than the long-term debt, provision for income taxes, dividends, and the above-mentioned assumptions) as percentage of revenues, rounded to 3 decimal places (for example, Merchandise inventoryet sales is .1334 or 13.3%). Use the most recent (FY ended January, 2016) and not average rates for the forecasting. Use cash and cash equivalents as plug. 12 Months Ended Jan. 31, 2016 Feb. 01, 2015 $ 88,519 $ 83,176 58,254 54,787 30,265 28,389 Feb. 02, 2014 $ 78,812 51,897 26,915 Appendix A Consolidated Statements of Earnings - USD ($) shares in Millions, $ in Millions Net Sales Cost of Sales Gross Profit Operating Expenses: Selling, General and Administrative Depreciation Total Operating Expenses Operating Income Interest and Other (Income) Expense: Interest and Investment Income Interest Expense Interest and Other, net Earnings before provision for income taxes Provision for Income Taxes Net Earnings 16,801 1,690 18,491 11,774 16,280 1,640 17,920 10,469 16,122 1,627 17,749 9,166 (12) (166) 919 753 11,021 4,012 $ 7,009 (337) 830 493 9,976 3,631 $ 6,345 711 699 8,467 3,082 $5,385 Jan. 31, 2016 Feb. 01, 2015 $ 2,216 1,890 11,809 1,078 16,993 39,266 17,075 22,191 2,102 1,263 42,549 $ 1,723 1,484 11,079 1,016 15,302 38,513 15,793 22,720 1,353 571 39,946 Appendix A continued. Consolidated Balance Sheets - USD ($) $ in Millions Current Assets: Cash and Cash Equivalents Receivables, net Merchandise Inventories Other Current Assets Total Current Assets Property and Equipment, at cost Less Accumulated Depreciation Net Property and Equipment Goodwill Other Assets Total Assets Current Liabilities: Short-Term Debt Accounts Payable Accrued Salaries and Related Expenses Sales Taxes Payable Deferred Revenue Income Taxes Payable Current Installments of Long-Term Debt Other Accrued Expenses Total Current Liabilities Long-Term Debt, excluding current installments Other Long-Term Liabilities Deferred Income Taxes Total Liabilities Stockholders' Equity Common Stock, par value $0.05; authorized: 10 billion shares; issued: 1.772 billion shares at January 31, 2016 and 1.768 billion shares at February 1, 2015; outstanding: 1.252 billion shares at January 31, 2016 and 1.307 billion shares at February 1, 2015 Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Treasury Stock, at cost, 520 million shares at January 31, 2016 and 461 million shares at February 1, 2015 Total Stockholders' Equity Total Liabilities and Stockholders' Equity 350 6,565 1,515 476 1,566 290 5,807 1,391 434 1,468 34 35 1,943 12,526 20,888 1,965 854 36,233 38 1,806 11,269 16,869 1,844 642 30,624 88 9,347 30,973 (898) (33,194) 8,885 26,995 (452) (26,194) 6,316 9,322 $ 42,549 $ 39,946 Problem 1 (20pts) Appendix A contains the financial statements of Home Depot Inc. for fiscal year ended January 31, 2016. Forecast the FY2016 income statement and balance sheet of Home Depot using the set of assumptions and requirements outlined below. Round all $ forecasts to millions. Use average historical revenue growth rate to forecast revenue (round the rate to nearest whole percent). Assume no change for goodwill, interest and investment income, interest expense, short-term debt, common stock and paid-in capital, and accumulated other comprehensive loss. Capital expenditures were $1,503 million, and dividends were $3,031 million for 2015. Forecast depreciation as a percentage of net PP&E at the start of the year. Use the historical FY2015 (FY ended January, 2016) rate to forecast FY2016. HD's long-term debt footnote indicates maturities of long-term debt of $110 million for fiscal 2017. Assume that Income Taxes Payable is 0. Assume the company will repurchase $4 billion of common stock in the coming year. Estimate forecast assumptions for balance sheet and income statement items other than the long-term debt, provision for income taxes, dividends, and the above-mentioned assumptions) as percentage of revenues, rounded to 3 decimal places (for example, Merchandise inventoryet sales is .1334 or 13.3%). Use the most recent (FY ended January, 2016) and not average rates for the forecasting. Use cash and cash equivalents as plug. 12 Months Ended Jan. 31, 2016 Feb. 01, 2015 $ 88,519 $ 83,176 58,254 54,787 30,265 28,389 Feb. 02, 2014 $ 78,812 51,897 26,915 Appendix A Consolidated Statements of Earnings - USD ($) shares in Millions, $ in Millions Net Sales Cost of Sales Gross Profit Operating Expenses: Selling, General and Administrative Depreciation Total Operating Expenses Operating Income Interest and Other (Income) Expense: Interest and Investment Income Interest Expense Interest and Other, net Earnings before provision for income taxes Provision for Income Taxes Net Earnings 16,801 1,690 18,491 11,774 16,280 1,640 17,920 10,469 16,122 1,627 17,749 9,166 (12) (166) 919 753 11,021 4,012 $ 7,009 (337) 830 493 9,976 3,631 $ 6,345 711 699 8,467 3,082 $5,385 Jan. 31, 2016 Feb. 01, 2015 $ 2,216 1,890 11,809 1,078 16,993 39,266 17,075 22,191 2,102 1,263 42,549 $ 1,723 1,484 11,079 1,016 15,302 38,513 15,793 22,720 1,353 571 39,946 Appendix A continued. Consolidated Balance Sheets - USD ($) $ in Millions Current Assets: Cash and Cash Equivalents Receivables, net Merchandise Inventories Other Current Assets Total Current Assets Property and Equipment, at cost Less Accumulated Depreciation Net Property and Equipment Goodwill Other Assets Total Assets Current Liabilities: Short-Term Debt Accounts Payable Accrued Salaries and Related Expenses Sales Taxes Payable Deferred Revenue Income Taxes Payable Current Installments of Long-Term Debt Other Accrued Expenses Total Current Liabilities Long-Term Debt, excluding current installments Other Long-Term Liabilities Deferred Income Taxes Total Liabilities Stockholders' Equity Common Stock, par value $0.05; authorized: 10 billion shares; issued: 1.772 billion shares at January 31, 2016 and 1.768 billion shares at February 1, 2015; outstanding: 1.252 billion shares at January 31, 2016 and 1.307 billion shares at February 1, 2015 Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Treasury Stock, at cost, 520 million shares at January 31, 2016 and 461 million shares at February 1, 2015 Total Stockholders' Equity Total Liabilities and Stockholders' Equity 350 6,565 1,515 476 1,566 290 5,807 1,391 434 1,468 34 35 1,943 12,526 20,888 1,965 854 36,233 38 1,806 11,269 16,869 1,844 642 30,624 88 9,347 30,973 (898) (33,194) 8,885 26,995 (452) (26,194) 6,316 9,322 $ 42,549 $ 39,946