Question

Forecasting

A) Dexter Company reported the following 2018 income statement

Total revenue	$13,256,500
Cost of revenue	7,066,300
Gross profit	6,190,200
Selling and administrative expenses	3,758,200
Operating income	2,432,000
Interest expense	572,800
Income before income taxes	1,859,200
Income tax expense	687,905
Net income	$   1,171,295

Forecast Dexter’s income statement assuming a 5% increase in sales, a 17% effective tax rate, and a continuation of the 2018 percentage relation to net sales for expenses except for interest where the company projects no change.

B) Snap-On Corp 2018 financial statements include the following:

(millions)	2018	2017
Net sales	$ 3,430.4	$ 3,352.8
Accounts receivable	1,159.4	1,091.9
Inventory	530.5	497.8
Accounts payable	170.9	148.3

Forecast accounts receivable, inventory, and accounts payable for 2019 given that sales are expected to grow by 8% in 2019.

Answer 1