Two-Year-Ahead Forecasting of Financial Statement Following are the financial st
ID: 2534435 • Letter: T
Question
Two-Year-Ahead Forecasting of Financial Statement
Following are the financial statements of Target Corporation from its FY2015 annual report.
We forecast Target's income statement using the following forecast assumptions for both years:
Instructions: Forecast Target's fiscal year ended 2016 and 2017 income statements.
Use the same forecasting assumptions for both years.
Round forecasts to $ millions.
Use rounded figures for subsequent forecast calculations.
Do not use negative signs with your answers in the income statement.
Hint: Forecasted FY2016 gain on sale is computed as proceeds from the disposal of net assets from discontinued operations minus net assets from discontinued operations ($350 million - $226 million). Forecast $0 gain on sale in FY2017.
We forecast Target's financials using the following forecast assumptions for both year:
Assume Target buys back common stock at $2,000 million in FY2016 and retires the stock.
(Hint: Retained earnings are reduced by the cost of the stock buyback.) No stock buybacks happen in FY2017.
Instructions: Forecast Target's fiscal year ended 2016 and 2017 balance sheets.
Use the same forecasting assumptions for both years.
Round forecasts to $ millions.
Use rounded figures for subsequent forecast calculations.
Do not use negative signs with your answers in the income statement.
Target Corporation Consolidated Statements of Operations 12 Months Ended $millions Jan. 30, 2016 Jan. 31, 2015 Feb. 01, 2014 Sales 73,785 72,618 71,279 Cost of sales 51,997 51,278 50,039 Gross margin 21,788 21,340 21,240 Selling, general and administrative expenses 14,665 14,676 14,465 Depreciation and amortization 2,213 2,129 1,996 Gain on sale (620) - (319) Earnings from continuing operations before interest expense & income taxes 5,530 4,535 5,170 Net interest expense 607 882 1,049 Earnings from continuing operations before income taxes 4,923 3,653 4,121 Provision for income taxes 1,602 1,204 1,427 Net earnings from continuing operations 3,321 2,449 2,694 Discontinued operations, net of tax 42 (4,085) (723) Net earnings (loss) 3,363 (1,636) 1,971 Target Corporation Consolidated Statements of Operations S millions FY2016 Est. FY2017 Est. Sales 5,999 V 78,279 Cost of sales 53,579 55,186 X Gross margin Selling, general and administrative expenses Depreciation and amortization 22,420 23,092 15,124 5,577 X 2,118 2,240 X Gain on sale 124 Earnings from continuing operations before interest and tax 5,302 5,275 X Net interest expense 607 607 Earnings from continuing operations before tax 4,695 4,668 X Provisions for income taxes 1,526 1,517 X Net earnings 3,169 3,15 XExplanation / Answer
Target Corporation
Consolidated Statement of Operations
Earnings from continuing opertaions before
Interest and tax
$ in Millions FY 16 Estimates FY 17 Estimates Sales 75999 78279 Cost of Sales 53579 55187 Gross Margin 22420 23092 Selling, General and Administrative Expenses 15124 15577 Depriciation & Amortisation 2118 1940 (ADD) Gain on Sale 124 0Earnings from continuing opertaions before
Interest and tax
5302 5575 Net Interest expense 607 607 Earnings from continuing operations before tax 4695 4968 Provision For Income taxes 1525 1615 Net Income 3169 3353Related Questions
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