Refine Assumptions for Dividend and Retained Earnings Forecast

Following are the income statement and balance sheet for Medtronic PLC.

Consolidated Statement of Income ($ millions)

For Fiscal Year Ended

April 26, 2019Net sales$30,557Costs and expensesCost of products sold9,155Research and development expenses2,330Selling, general, and administrative expense10,418Amortization of intangible assets1,764Restructuring charges, net198Certain litigation charges, net166Other operating expense, net258Operating profit (loss)6,268Other nonoperating income, net(373)Interest expense1,444Income (loss) before income taxes5,197Income tax provision547Net income (loss)4,650Net (income) loss attributable to noncontrolling interests(19)Net income (loss) attributable to Medtronic$ 4,631

Consolidated Balance Sheet ($ millions)April 26, 2019Current assetsCash and cash equivalents$ 4,393Investments5,455Accounts receivable, less allowances of $1906,222Inventories, net3,753Other current assets2,144Total current assets21,967Property, plant, and equipment, net4,675Goodwill39,959Other intangible assets, net20,560Tax assets1,519Other assets1,014Total assets$89,694Current liabilitiesCurrent debt obligations$838Accounts payable1,953Accrued compensation2,189Accrued income taxes567Other accrued expenses2,925Total current liabilities8,472Long-term debt24,486Accrued compensation and retirement benefits1,651Accrued income taxes2,838Deferred tax liabilities1,278Other liabilities757Total liabilities39,482Shareholders' equityOrdinary shares0Additional paid-in capital26,532Retained earnings26,270Accumulated other comprehensive loss(2,711)Total shareholders' equity50,091Noncontrolling interests121Total equity50,212Total liabilities and shareholders' equity$89,694

a. Use the financial statements along with the additional information below to forecast retained earnings for the fiscal year ended April 2020.

Forecasted net income to Medtronic shareholders for fiscal 2020$4,908 millionDividends to Medtronic shareholders in fiscal 20192,693 million

Forecasted retained earnings $Answer

million

b. Suppose the MD&A section of the Form 10-K and additional guidance from the company reveals the following additional information. "Ordinary cash dividends declared and paid totaled 50.0 cents per share for each quarter of fiscal year 2019."

At year end April 26, 2019, the company had 1,340,697,595 shares issued and outstanding. Use this information to refine your forecast of retained earnings for the fiscal year ended April 2020.

Forecasted retained earnings $Answer

million