Refer to the financial statements of United Parcel Service to answer the following requirements. The following assumptions should be useful:

? UPS's sales forecast for 2018 is $70,000 million.

? Operating expenses and operating profits increase in proportion to sales.

? Investment income and interest expense are unchanged in 2018.

? Income taxes are 25% of pretax earnings.

? Marketable securities and noncurrent investments are unchanged in 2018; all other assets

(except cash) increase in proportion to sales.

? Long-term debt and current maturities of long-term debt are unchanged in 2018; all other li-

abilities increase in proportion to sales.

? Dividends are 50% of net income. Income and dividends are the only changes to stockholders'

equity in 2018

REQUIRED

a. Prepare an income statement forecast for 2018.

b. Prepare a balance sheet forecast for 2018

UNITED PARCEL SERVICE, INC. Income Statement Years Ended December 31 ($ millions) 2017 2016 2015 Revenue . . .. .. . $65,872 $60,906 $58,363 Operating expenses: Compensation and benefits . 34,588 34,770 31,028 Repairs and maintenance. . . . 1,600 1,538 1,400 Depreciation and amortization . 2,282 2,224 2,084 Purchased transportation . . . 10,989 9, 129 8,043 Fuel. ....... 2,690 2, 118 2,482 Other occupancy 1,155 1,037 1,022 Other expenses . . . . 5,039 4,623 4,636 Total operating expenses . 58,343 55,439 50,695 Operating profit. ....... 7,529 5,467 7,668 Other income and (expense): Investment income and other . . . . 72 50 15 Interest expense . . . . ... (453) (381) (341) Total other income and (expense) (381) (331) (326) Income before income taxes 7,148 5,136 7,342 Income tax expense . . . . 2,238 1,705 2,498 Net income . . . . $ 4,910 $ 3,431 $ 4,844UNITED PARCEL SERVICE, INC. Balance Sheet December 31 ($ millions) 2017 2016 2015 Assets Current assets: Cash and cash equivalents .. .... $ 3,320 $ 3,476 $ 2,730 Marketable securities . . . . 749 1,091 1,996 Accounts receivable, net . 8,773 7,695 7, 134 Other current assets . . . 2,706 1,587 1,348 Total current assets . . ... 15,548 13,849 13,208 Property, plant and equipment, net. . 22, 118 18,800 18,352 Goodwill . .. . . 3,872 3,757 3,419 Intangible assets, net . . .. . .. 1,964 1,758 1,549 Investments and restricted cash. . 483 476 473 Deferred income tax assets . . 265 591 255 Other noncurrent assets. . . 1,153 1, 146 1,055 Total assets . $45,403 $40,377 $38,311 Liabilities and shareholders' equity Current liabilities: Current maturities of long-term debt and commercial paper . . . $ 4,011 $ 3,681 $ 3,018 Accounts payable . . .. . 3,872 3,042 2,587 Accrued wages and withholdings. 2,521 2,317 2,253 Hedge margin liabilities . . 17 575 717 Self-insurance reserves . .... 705 670 657 Accrued group welfare and retirement plan contributions 677 598 525 Other current liabilities .... 905 847 939 Total current liabilities. 12,708 11,730 10,696 Long-term debt . . . 20,278 12,394 11,316