Unit 7

Please help with questions A-G

INCOME STATEMENT For Year Ended December 31 (in millions) 20x6 20x5 20x4 Net sales...... Cost of goods sold.. Gross profit.... Selling, general, and administrative expenses Research and development costs ...... Restructuring costs (credits) and other.. Earnings from operations. Interest expense ..... Other income (charges) Earnings before income taxes. Provision for income taxes. Net earnings. $13,234 8,670 4,564 2,781 779 659 345 219 (18) 108 32 76 $13,994 8,375 5,619 2,665 784 (44) 2,214 $14,089 8,086 6,003 2,846 817 350 1,990 142 261 2,109 717 $ 1,392 178 96 2,132 725 $ 1,407 $ Page 538 20x6 20x5 BALANCE SHEET At December 31 (in millions, except share and per share data) Assets Current assets Cash and cash equivalents..... Receivables, net. Inventories, net.. Deferred income taxes. Other current assets Total current assets Property, plant, and equipment, net Goodwill, net ... Other long-term assets. Total assets.. $ 246 2,653 1,718 575 299 $ 448 2,337 1,137 521 240 4,683 5,659 948 2,072 $13,362 5,491 5,919 947 1,855 $14,212 Liabilities and shareholders' equity Current liabilities Accounts payable and other current liabilities Short-term borrowings $ 3,276 $ 3,403 1.378 2.058 Current liabilities Accounts payable and other current liabilities Short-term borrowings........ Current portion of long-term debt. Accrued income taxes .... Total current liabilities ..... Long-term debt, net of current portion Postemployment liabilities .... Other long-term liabilities. Total liabilities Shareholders' equity Common stock, $2.50 par value 950,000,000 shares authorized: issued 391,292,760 shares in 20x6 and 20x5; 290,929,701 and 290,484,266 shares outstanding in 20x6 and 20x5 . Additional paid in capital... Retained earnings ...... Accumulated other comprehensive loss. $ 3,276 1,378 156 544 5,354 1,666 2,728 720 0,468 $ 3,403 2,058 148 606 6,215 1,166 2,722 681 10, 978 978 849 871 7,431 7,869 (597) (482) 8,661 9,236 (5,767) (5,808) 2,894 3,428 $13,362 $14,212 Treasury stock, at cost: 100,363,059 shares in 20x6 and 100,808,494 shares in 20x5 ..... Total shareholders' equity ..... Total liabilities and shareholders' equity.. Page 539 Required: Prepare forecasts of its income statement, balance sheet and statement of cash flows for 20x7 under the following assumptions: a All financial ratios remain at 20x6 levels. 6. Kodak will not record restructuring costs for 20x7. c. Taxes payable are at the 20x6 level of $544 million. d Depreciation expense charged to SG&A is $765 million and $738 million for 20x6 and 20x5, respectively. e. Gross PPE is $12.982 million and $12,963 million for 20x6 and 20x5, respectively. f. Projected current maturities of long-term debt are $13 million for 20x7. g. Capital expenditures for 20x6 and 20x5 are $1,047 and $783, respectively. INCOME STATEMENT For Year Ended December 31 (in millions) 20x6 20x5 20x4 Net sales...... Cost of goods sold.. Gross profit.... Selling, general, and administrative expenses Research and development costs ...... Restructuring costs (credits) and other.. Earnings from operations. Interest expense ..... Other income (charges) Earnings before income taxes. Provision for income taxes. Net earnings. $13,234 8,670 4,564 2,781 779 659 345 219 (18) 108 32 76 $13,994 8,375 5,619 2,665 784 (44) 2,214 $14,089 8,086 6,003 2,846 817 350 1,990 142 261 2,109 717 $ 1,392 178 96 2,132 725 $ 1,407 $ Page 538 20x6 20x5 BALANCE SHEET At December 31 (in millions, except share and per share data) Assets Current assets Cash and cash equivalents..... Receivables, net. Inventories, net.. Deferred income taxes. Other current assets Total current assets Property, plant, and equipment, net Goodwill, net ... Other long-term assets. Total assets.. $ 246 2,653 1,718 575 299 $ 448 2,337 1,137 521 240 4,683 5,659 948 2,072 $13,362 5,491 5,919 947 1,855 $14,212 Liabilities and shareholders' equity Current liabilities Accounts payable and other current liabilities Short-term borrowings $ 3,276 $ 3,403 1.378 2.058 Current liabilities Accounts payable and other current liabilities Short-term borrowings........ Current portion of long-term debt. Accrued income taxes .... Total current liabilities ..... Long-term debt, net of current portion Postemployment liabilities .... Other long-term liabilities. Total liabilities Shareholders' equity Common stock, $2.50 par value 950,000,000 shares authorized: issued 391,292,760 shares in 20x6 and 20x5; 290,929,701 and 290,484,266 shares outstanding in 20x6 and 20x5 . Additional paid in capital... Retained earnings ...... Accumulated other comprehensive loss. $ 3,276 1,378 156 544 5,354 1,666 2,728 720 0,468 $ 3,403 2,058 148 606 6,215 1,166 2,722 681 10, 978 978 849 871 7,431 7,869 (597) (482) 8,661 9,236 (5,767) (5,808) 2,894 3,428 $13,362 $14,212 Treasury stock, at cost: 100,363,059 shares in 20x6 and 100,808,494 shares in 20x5 ..... Total shareholders' equity ..... Total liabilities and shareholders' equity.. Page 539 Required: Prepare forecasts of its income statement, balance sheet and statement of cash flows for 20x7 under the following assumptions: a All financial ratios remain at 20x6 levels. 6. Kodak will not record restructuring costs for 20x7. c. Taxes payable are at the 20x6 level of $544 million. d Depreciation expense charged to SG&A is $765 million and $738 million for 20x6 and 20x5, respectively. e. Gross PPE is $12.982 million and $12,963 million for 20x6 and 20x5, respectively. f. Projected current maturities of long-term debt are $13 million for 20x7. g. Capital expenditures for 20x6 and 20x5 are $1,047 and $783, respectively