Topic: Forecasting the Income Statement and Balance Sheet Following are the financial statements of CVS Health Corporation for the year ended December 31, 2016. Prepare a forecasted income statement and balance sheet for the company for the next year. CVS HEALTH CORPORATION Consolidated Balance Sheets Dec. 31, In millions 2016 Cash and cash equivalents $ 3,371 Short-term investments 87 Accounts receivable, net 12,164 Inventories 14,760 Other current assets 660 Total current assets 31,042 Property and equipment, net 10,175 Goodwill 38,249 Intangible assets, net 13,511 Other assets 1,485 Total assets 94,462 Dec. 31, 2015 $ 2,459 88 11,888 14,001 722 29,158 9,855 38,106 13,878 1.440 92.437 7,490 7,653 6,829 Accounts payable Claims and discounts payable Accrued expenses Short-term debt Current portion of long-term debt Total current liabilities Long-term debt Deferred income taxes Other long-term liabilities Redeemable noncontrolling interest 7,946 9,451 6,937 1,874 42 26,250 25,615 4,214 1,549 1,197 23,169 26,267 4,217 1,542 39 17 (28,886) (31) Common stock, par value $0.01 Treasury stock, at cost Shares held in trust Capital surplus Retained earnings Accumulated other comprehensive loss Total CVS Health shareholders' equity Noncontrolling interest Total shareholders' equity Total liabilities and shareholders' equity (33,452) (31) 31,618 38,983 (305) 36,830 30,948 35,506 (358) 37,196 36,834 $ 94,462 37,203 $ 92,437 Continued next page CVS HEALTH CORPORATION Consolidated Statements of Income Dec. 31, In millions 2016 Net revenues $ 177,526 Cost of revenues 148,669 Gross profit 28,857 Total operating expenses 18,519 Operating profit 10,338 Interest expense, net 1,058 Loss on early extinguishment of debt 643 Income before income tax provision 8,637 Income tax provision 3,317 Income from continuing operations 5,320 Income (loss) from discontinued operations, net Net income 5,319 Net loss attributable to noncontrolling interest (2) Net income attributable to CVS Health Corporation $ 5,317 Dec. 31, 2015 $ 153,290 126,762 26,528 17,074 9,454 838 0 8,616 3,386 5,230 (1) 5,239 (2) $ 5,237 To forecast the financial statements, make the following assumptions. For accounts that are not included in the list below, assume that the amount will not change for the forecasted year. ............. 5.0% 83.7% 10.4% $0 38.4% $0 6.9% 8.3% Growth in net revenues Cost of revenues. Operating expenses to net revenues.. Loss on early extinguishment of debt............ Income tax provision to income before income tax provision... Loss from discontinued operations. A/R to net revenues Inventories to net revenues. CAPEX to net revenues Forecasted depreciation expense ($ millions). Forecasted amortization of intangible assets ($ millions).... Long-term debt due 2018 ($ millions).. A/P to net revenues Claims and discounts payable to net revenues. Accrued expenses to net revenues Dividends to net income attributable to CVS Health Corp. 1.7% $1,231 $302 $1,916 4.5% 5.3% 3.9% 20.0% Topic: Forecasting the Income Statement and Balance Sheet Following are the financial statements of CVS Health Corporation for the year ended December 31, 2016. Prepare a forecasted income statement and balance sheet for the company for the next year. CVS HEALTH CORPORATION Consolidated Balance Sheets Dec. 31, In millions 2016 Cash and cash equivalents $ 3,371 Short-term investments 87 Accounts receivable, net 12,164 Inventories 14,760 Other current assets 660 Total current assets 31,042 Property and equipment, net 10,175 Goodwill 38,249 Intangible assets, net 13,511 Other assets 1,485 Total assets 94,462 Dec. 31, 2015 $ 2,459 88 11,888 14,001 722 29,158 9,855 38,106 13,878 1.440 92.437 7,490 7,653 6,829 Accounts payable Claims and discounts payable Accrued expenses Short-term debt Current portion of long-term debt Total current liabilities Long-term debt Deferred income taxes Other long-term liabilities Redeemable noncontrolling interest 7,946 9,451 6,937 1,874 42 26,250 25,615 4,214 1,549 1,197 23,169 26,267 4,217 1,542 39 17 (28,886) (31) Common stock, par value $0.01 Treasury stock, at cost Shares held in trust Capital surplus Retained earnings Accumulated other comprehensive loss Total CVS Health shareholders' equity Noncontrolling interest Total shareholders' equity Total liabilities and shareholders' equity (33,452) (31) 31,618 38,983 (305) 36,830 30,948 35,506 (358) 37,196 36,834 $ 94,462 37,203 $ 92,437 Continued next page CVS HEALTH CORPORATION Consolidated Statements of Income Dec. 31, In millions 2016 Net revenues $ 177,526 Cost of revenues 148,669 Gross profit 28,857 Total operating expenses 18,519 Operating profit 10,338 Interest expense, net 1,058 Loss on early extinguishment of debt 643 Income before income tax provision 8,637 Income tax provision 3,317 Income from continuing operations 5,320 Income (loss) from discontinued operations, net Net income 5,319 Net loss attributable to noncontrolling interest (2) Net income attributable to CVS Health Corporation $ 5,317 Dec. 31, 2015 $ 153,290 126,762 26,528 17,074 9,454 838 0 8,616 3,386 5,230 (1) 5,239 (2) $ 5,237 To forecast the financial statements, make the following assumptions. For accounts that are not included in the list below, assume that the amount will not change for the forecasted year. ............. 5.0% 83.7% 10.4% $0 38.4% $0 6.9% 8.3% Growth in net revenues Cost of revenues. Operating expenses to net revenues.. Loss on early extinguishment of debt............ Income tax provision to income before income tax provision... Loss from discontinued operations. A/R to net revenues Inventories to net revenues. CAPEX to net revenues Forecasted depreciation expense ($ millions). Forecasted amortization of intangible assets ($ millions).... Long-term debt due 2018 ($ millions).. A/P to net revenues Claims and discounts payable to net revenues. Accrued expenses to net revenues Dividends to net income attributable to CVS Health Corp. 1.7% $1,231 $302 $1,916 4.5% 5.3% 3.9% 20.0%