Two-Year-Ahead Forecasting of Financial Statements Assume the following are the
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Question
Two-Year-Ahead Forecasting of Financial Statements
Assume the following are the financial statements of Target Corp.
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:
* 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 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 $2,488Explanation / Answer
For fiscal year ended (millions)
Jan. 29, 2011
2012 Est.
2013 Est.
Sales
$66,786
$70,125
$73,632
Credit card revenues
1,604
$1,684
$1,768
Total revenues
68,390
$71,810
$75,400
Cost of sales
46,725
$49,088
$51,542
Selling, general and administrative expenses
13,469
$14,165
$14,874
Credit card expenses
860
$903
$948
Depreciation and amortization
2,084
$2,149
$2,149
Earnings before interest expense and income taxes
5,252
$5,505
$5,888
Net interest expense
Nonrecourse debt collaterized by credit card receivables
83
$83
$83
Other interest expense
677
$677
$677
Interest income
3
$3
$3
Net interest expense
757
$757
$757
Earnings before income taxes
4,495
$4,748
$5,131
Provisions for income taxes
1,575
$1,662
$1,796
Net earnings
$2,920
$3,086
$3,335
For fiscal year ended (millions)
Jan. 29, 2011
2012 Est.
2013 Est.
Sales
$66,786
$70,125
$73,632
Credit card revenues
1,604
$1,684
$1,768
Total revenues
68,390
$71,810
$75,400
Cost of sales
46,725
$49,088
$51,542
Selling, general and administrative expenses
13,469
$14,165
$14,874
Credit card expenses
860
$903
$948
Depreciation and amortization
2,084
$2,149
$2,149
Earnings before interest expense and income taxes
5,252
$5,505
$5,888
Net interest expense
Nonrecourse debt collaterized by credit card receivables
83
$83
$83
Other interest expense
677
$677
$677
Interest income
3
$3
$3
Net interest expense
757
$757
$757
Earnings before income taxes
4,495
$4,748
$5,131
Provisions for income taxes
1,575
$1,662
$1,796
Net earnings
$2,920
$3,086
$3,335
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