You are building a 3-statement projection model for Monster Beverage Corporation, and you have set up the Balance Sheet projections based on historical trends, as shown below:

Your co-worker reviews your model and says that you should use different projection methods for some of these line items. He proposes one of the following options instead:

OPTION #1:

OPTION #2:

OPTION #3:

OPTION #4:

Which of these methods is LEAST acceptable? a. Option #1. b. Option #2. c. Option #3.

d. Option #4. e. We cannot answer this question without also seeing the Change in Working Capital and how it changes with each calculation method.

\begin{tabular}{|c|c|c|c|c|c|c|c|c|c|c|} \hline 4 & \begin{tabular}{l|l|l} A & B \end{tabular} & 0 & E & F & G & H & I & J & K & L \\ \hline 10 & \multirow[b]{3}{*}{ Financial Statement Drivers: } & & & & & & & & & \\ \hline 11 & & & \multicolumn{3}{|c|}{ Historical } & \multicolumn{5}{|c|}{ Projected } \\ \hline 12 & & Unitst & FY19 & FY20 & FY21 & FY22 & FY23 & FY24 & FY25 & FY26 \\ \hline 33 & & & & & & & & & & \\ \hline 34 & \multicolumn{10}{|l|}{ Balance Sheet: } \\ \hline 35 & Accounts Receivables \% Revenue: & & 12.9% & 14.5% & 16.2% & 17.0% & 18.0% & 19.0% & 20.0% & 21.0% \\ \hline 36 & Inventory % Cost of Sales: & % & 21.4% & 17.8% & 24.4% & 21.2% & 21.2% & 21.2% & 21.2% & 21.2% \\ \hline 37 & Prepaid Expenses \& Other Assets \% OpEx: & \% & 7.5% & 7.3% & 8.8% & 7.9% & 7.9% & 7.9% & 7.9% & 7.9% \\ \hline 39 & Accounts Payable \% Cost of 5ales: & 56 & 16.3% & 15.8% & 16.6% & 16.2% & 16.2% & 16.2% & 16.2% & 16.2% \\ \hline 40 & Accrued Liabilities \% OpEx: & % & 30.7% & 37,4% & 39.5% & 40.0% & 41.0% & 42,0% & 43.0% & 44.0% \\ \hline 41 & Deferted Revenue \% Revanue: & \$ & 7.9% & 6.7% & 5.2% & 5.0% & 4.7% & 4.4% & 4.1% & 3.8% \\ \hline 42 & Other Long-Term Liabilities \% OpEx: & % & 2.7% & 2.5% & 1.8% & 2,4% & 2.4% & 2.4% & 2.4% & 2,4% \\ \hline \end{tabular} \begin{tabular}{|c|c|c|c|c|c|c|c|c|c|} \hline \multirow[b]{2}{*}{ Financial Statement Drivers: } & \multirow[b]{2}{*}{ Units: } & \multicolumn{3}{|c|}{ Historical } & \multicolumn{5}{|c|}{ Projected } \\ \hline & & FY19 & FY20 & FY21 & FY22 & FY23 & FY24 & FY25 & FY26 \\ \hline \multicolumn{10}{|l|}{ Balance Sheet: } \\ \hline Accounts Receivables \% Revenue: & \% & 12.9% & 14.5% & 16.2% & 17.0% & 18.0% & 19.0% & 20.0% & 21.0% \\ \hline Inventory % Cost of Sales: & * & 21.4% & 17,8% & 24,4% & 21.2% & 21.2% & 21.2% & 21.2% & 21.2% \\ \hline Prepaid Expenses \& Other Assets \% Total Expenses: & \% & 3.0% & 2.7% & 3.1% & 2.9% & 2.9% & 2.9% & 2.9% & 2.9% \\ \hline Accounts Payable \% Total Expenses: & % & 9.8% & 10.0% & 10.8% & 10.2% & 10.2% & 10.2% & 10.2% & 10.2% \\ \hline Deferred Revenue \% Revenue: & 96 & 7.9% & 6.7% & 5.2% & 5.0% & 4.7% & 4.4% & 4.1% & 3.8% \\ \hline Other Long-Term Liabilities \% OpEx: & s & 2.7% & 2.5% & 1.8% & 2.4% & 2.4% & 2.4% & 2.4% & 2.4% \\ \hline \end{tabular} \begin{tabular}{|c|c|c|c|c|c|c|c|c|c|} \hline \multirow[b]{2}{*}{ Financial Statement Drivers: } & \multirow[b]{2}{*}{ Units: } & \multicolumn{3}{|c|}{ Historieal } & \multicolumn{5}{|c|}{ Projected } \\ \hline & & FY19 & FY20 & FY21 & FY22 & FY23 & FY24 & FY25 & FY26 \\ \hline \multicolumn{10}{|l|}{ Balance Sheet: } \\ \hline Accounts Receivables \% Revenue: & \% & 12.9% & 14.5% & 16.2% & 14.5% & 14.5% & 14.5% & 14.5% & 14.5% \\ \hline Inventory \% cost of Sales: & \% & 21.4% & 17.8% & 24.4% & 25.0% & 26.0% & 27.0% & 28.0% & 29.0% \\ \hline Prepaid Expenses \& Other Assets \% Total Expenses: & 9 & 3.0% & 2.7% & 3.1% & 3.1% & 3.2% & 3.2% & 3.3% & 3.3% \\ \hline Accounts Payable \% Total Expenses: & s & 9.8% & 10.0% & 10.8% & 10.9% & 11.0% & 11.1% & 11.2% & 11.3% \\ \hline Deferred Revenue \% Revenue: & \% & 7.9% & 6.7% & 5.2% & 5.0% & 4.7% & 4.4% & 4.1% & 3.8% \\ \hline Other Lone-Term Liabilities \% OpEx: & \% & 2.7% & 2.5% & 1.8% & 2,4% & 2,4% & 2.4% & 2.4% & 2.4% \\ \hline \end{tabular} \begin{tabular}{|c|c|c|c|c|c|c|c|c|c|} \hline \multirow[b]{2}{*}{ Financial Statement Drivers: } & \multirow[b]{2}{*}{ Units: } & \multicolumn{3}{|c|}{ Historical } & \multicolumn{5}{|c|}{ Projected } \\ \hline & & FY19 & FY20 & FY21 & FY22 & FY23 & FY24 & FY25 & FY26 \\ \hline \multicolumn{10}{|l|}{ Balance Sheet: } \\ \hline Accounts Receivables % Total Expenses: & \% & 19.3% & 22.5% & 23.9% & 24.5% & 25.0% & 25.5% & 26.0% & 26.5% \\ \hline Inventory \% Revenue: & 8 & 8.6% & 7.29 & 10.7% & 8.8% & 8.8% & 8.8% & 8.8% & 8.8% \\ \hline Prepaid Expenses \& Other Assets \% Total Expenses: & % & 3.0% & 2.7% & 3.1% & 3.1% & 3.2% & 3.2% & 3.3% & 3.3% \\ \hline Accounts Payable \% Total Expenses: & % & 9.8% & 10.0% & 10.8% & 10.9% & 11.0% & 11.1% & 11.2% & 11.3% \\ \hline Deferred Revenue \% Net Income; & % & 29.9% & 22.0% & 20.7% & 20.0% & 19.0% & 18.0% & 17.0% & 16.0% \\ \hline Other Long-Tem Liabilities \% Total Expenses: & \% & 1.1% & 0.9% & 0.6% & 0.5% & 0.5% & 0,4% & 0.4% & 0.4% \\ \hline \end{tabular} \begin{tabular}{|c|c|c|c|c|c|c|c|c|c|} \hline \multirow[b]{2}{*}{ Financial Statement Drivers: } & \multirow[b]{2}{*}{ Units: } & \multicolumn{3}{|c|}{ Historical } & \multicolumn{5}{|c|}{ Projected } \\ \hline & & FY19 & FY20 & FY21 & FY22 & FY23 & FY24 & FY25 & FY26 \\ \hline \multicolumn{10}{|l|}{ Balance Sheet: } \\ \hline Accounts Receivables \% Revenue: & % & 12.9% & 14.5% & 16.2% & 16.5% & 17.0% & 17.5% & 18.0% & 18.5% \\ \hline Inventory \% Total Expenses: & % & 12.9% & 11.2% & 15.8% & 13.3% & 13.3% & 13.3% & 13.3% & 13.3% \\ \hline Prepaid Expenses \& Other Assets \% Total Expenses: & % & 3.0% & 2.7% & 3.1% & 2.9% & 2.9% & 2.9% & 2.9% & 2.9% \\ \hline Accounts Payable \% Total Expenses: & % & 9.8% & 10.0% & 10.8% & 10.9% & 11.0% & 11.1% & 11.2% & 11.3% \\ \hline Accrued Liabilities \% Total Expenses: & % & 12.3% & 13.8% & 13.8% & 13.3% & 13.3% & 13.3% & 13.3% & 13.3% \\ \hline Deferred Revenue \% Revenue: & % & 7.9% & 6.7% & 5.2% & 5.0% & 4.5% & 4.5% & 4.0% & 4.0% \\ \hline Other Long-Term Liabilities \% Total Expenses: & % & 1.1% & 0.9% & 0.6% & 0.5% & 0.5% & 0.4% & 0.4% & 0.4% \\ \hline \end{tabular}