Question
Two-Year-Ahead Forecasting of Financial Statements Assume the following are the financial statements of Target Corp. Consolidated Statements of Operations For fiscal year ended (millions) Jan.
Two-Year-Ahead Forecasting of Financial Statements Assume the following are the financial statements of Target Corp.
Consolidated Statements of Operations | ||
---|---|---|
For fiscal year ended (millions) | Jan. 29, 2011 | Jan. 30, 2010 |
Sales | $66,786 | $63,435 |
Credit card revenues | 1,604 | 1,922 |
Total revenues | 68,390 | 65,357 |
Cost of sales | 46,725 | 44,062 |
Selling, general and administrative expenses | 13,469 | 13,078 |
Credit card expenses | 860 | 1,521 |
Depreciation and amortization | 2,084 | 2,023 |
Earnings before interest expense and income taxes | 5,252 | 4,673 |
Net interest expense | ||
Nonrecourse debt collateralized by credit card receivables | 83 | 97 |
Other interest expense | 677 | 707 |
Interest income | (3) | (3) |
Net interest expense | 757 | 801 |
Earnings before income taxes | 4,495 | 3,872 |
Provision for income taxes | 1,575 | 1,384 |
Net earnings | $2,920 | $2,488 |
Consolidated Statements of Financial Position | ||
---|---|---|
In millions | Jan. 29, 2011 | Jan. 30, 2010 |
Assets | ||
Cash and cash equivalents | $ 1,712 | $ 2,200 |
Credit card receivables | 6,153 | 6,966 |
Inventory | 7,596 | 7,179 |
Other current assets | 1,752 | 2,079 |
Total current assets | 17,213 | 18,424 |
Property and equipment | ||
Land | 5,928 | 5,793 |
Buildings and improvements | 23,081 | 22,152 |
Fixtures and equipment | 4,939 | 4,743 |
Computer hardware and software | 2,533 | 2,575 |
Construction-in-progress | 567 | 502 |
PPE, at cost | 37,048 | 35,765 |
Accumulated depreciation | (11,555) | (10,485) |
Prooerty and equipment, net | 25,493 | 25,280 |
Other noncurrent assets | 999 | 829 |
Total assets | $ 43,705 | $ 44,533 |
Liabilities and Shareholders' Investment | ||
Accounts payable | $6,625 | $6,511 |
Accrued expenses and other current liabilities | 3,326 | 3,120 |
Unsecured debt and other borrowings | 119 | 796 |
Nonrecourse debt collateralized by credit card receivables | -- | 900 |
Total current liabilities | 10,070 | 11,327 |
Unsecured debt and other borrowings | 11,653 | 10,643 |
Nonrecourse debt collateralized by credit card receivables | 3,954 | 4,475 |
Deferred income taxes | 934 | 835 |
Other noncurrent liabilities | 1,607 | 1,906 |
Total noncurrent liabilities | 18,148 | 17,859 |
Shareholders' investment | ||
Common stock | 59 | 62 |
Additional paid-in-capital | 3,311 | 2,919 |
Retained earnings | 12,698 | 12,947 |
Accumulated other comprehensive loss | (581) | (581) |
Total shareholders' investment | 15,487 | 15,347 |
Total liabilities and shareholders' investment | $ 43,705 | $ 44,533 |
Forecast Target's fiscal year ended 2012 and 2013 income statements. Use the same forecasting assumptions for both years.
Assume no change for net interest expense.
We forecast Target's financials using the following forecast assumptions for both years:
Sales (growth rate) | 5% |
Credit card revenues (we assume the same growth rate for sales) | 5% |
Cost of sales (% sales*) | 70.0% |
Selling, general and administrative expenses (% sales) | 20.2% |
Credit card expenses (% credit card revenues) | 53.6% |
Depreciation and amortization (% PY PPE, at cost) | 5.8% |
Nonrecourse debt interest expense (no change) | $83 |
Other interest expense (no change) | $677 |
Interest income (no change) | $3 |
Provisions for income taxes (% pretax income) | 35.0% |
* Note the distinction between sales and credit card revenues.
Instructions: Round answers to the nearest whole number. Do not use negative numbers with answers.
NOTE: Do not adjust net interest expense after "plug" is computed in forecasted balance sheet below. Assume net interest expense will not change.
Consolidated Statements of Operations | |||
---|---|---|---|
For fiscal year ended (millions) | Jan. 29, 2011 | 2012 Est. | 2013 Est. |
Sales | $66,786 | $Answer | $Answer |
Credit card revenues | 1,604 | Answer | Answer |
Total revenues | 68,390 | Answer | Answer |
Cost of sales | 46,725 | Answer | Answer |
Selling, general and administrative expenses | 13,469 | Answer | Answer |
Credit card expenses | 860 | Answer | Answer |
Depreciation and amortization | 2,084 | Answer | Answer |
Earnings before interest expense and income taxes | 5,252 | Answer | Answer |
Net interest expense | |||
Nonrecourse debt collaterized by credit card receivables | 83 | Answer | Answer |
Other interest expense | 677 | Answer | Answer |
Interest income | 3 | Answer | Answer |
Net interest expense | 757 | Answer | Answer |
Earnings before income taxes | 4,495 | Answer | Answer |
Provisions for income taxes | 1,575 | Answer | Answer |
Net earnings | $ 2,920 | $Answer | $Answer |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started