Question

Forecast the Balance Sheet

Following is the balance sheet for Medtronic PLC for the year ended April 29, 2016.

Medtronic plc
Consolidated Balance Sheets
($ millions)				Apr. 29, 2016	Apr. 24, 2015
Current assets
Cash and cash equivalents				$3,221	$4,843
Investments				9,758	14,637
Accounts receivable				5,562	5,112
Inventories				3,473	3,463
Tax assets				697	1,335
Prepaid expenses and other current assets				1,234	1,454
Total current assets				23,945	30,844
Property, plant, and equipment, net				4,841	4,699
Goodwill				41,500	40,530
Other intangible assets, net				26,899	28,101
Long-term tax assets				1,383	774
Other assets				1,559	1,737
Total assets				$100,127	$106,685
Current liabilities
Short-term borrowings				$1,338	$2,434
Accounts payable				1,709	1,610
Accrued compensation				1,712	1,611
Accrued income taxes				566	935
Deferred tax liabilities				-	119
Other accrued expenses				2,185	2,464
Total current liabilities				7,510	9,173
Long-term debt				30,247	33,752
Long-term accrued compensation				1,759	1,535
Long-term accrued income taxes				2,903	2,476
Long-term deferred tax liabilities				3,729	4,700
Other long-term liabilities				1,916	1,819
Total liabilities				48,064	53,455
Shareholders’ equity
Ordinary shares				-	-
Retained earnings				53,931	54,414
Accumulated other comprehensive (loss)				(1,868)	(1,184)
Total shareholders’ equity				52,063	53,230
Total liabilities and shareholders’ equity				$100,127	$106,685

Use the following assumptions to forecast the company’s balance sheet for FY2017.

Forecasted FY2017 net income							$5,486	million
Forecasted FY2017 net sales							$38,632	million
Accounts receivable							19.3%	of net sales
Inventories							12.0%	of net sales
Tax assets							2.4%	of net sales
Prepaid expenses and other current assets							4.3%	of net sales
Long-term tax assets							4.8%	of net sales
Other assets							5.4%	of net sales
Accounts payable							5.9%	of net sales
Accrued compensation							5.9%	of net sales
Accrued income taxes							2.0%	of net sales
Other accrued expenses							7.6%	of net sales
Long-term accrued income taxes							10.1%	of net sales
Long-term deferred tax liabilities							12.9%	of net sales
Other long-term liabilities							6.6%	of net sales
Investments							No change
Goodwill							No change
Long-term accrued compensation and retirement benefits							No change
Ordinary shares							No change
Accumulated other comprehensive (loss)							No change
CAPEX							3.6%	of net sales
Depreciation expense							18.9%	of prior year PPE, net
Amortization expense in FY2016							$1,931	million
Current maturities of debt due in FY2017							$1,338	million
Current maturities of debt due in FY2018							$6,176	million
Dividend payout ratio							60.5%

• Round your answers to the nearest whole number.

• Do not use negative signs with any of your answers.

Medtronic plc
Forecasted Consolidated Balance Sheet
($ millions)				EST. 2017
Current assets
Cash and cash equivalents				Answer
Investments				Answer
Accounts receivable				Answer
Inventories				Answer
Tax assets				Answer
Prepaid expenses and other current assets				Answer
Total current assets				Answer
Property, plant, and equipment, net				Answer
Goodwill				Answer
Other intangible assets, net				Answer
Long-term tax assets				Answer
Other assets				Answer
Total assets				Answer
Current liabilities
Short-term borrowings				Answer
Accounts payable				Answer
Accrued compensation				Answer
Accrued income taxes				Answer
Other accrued expenses				Answer
Total current liabilities				Answer
Long-term debt				Answer
Long-term accrued compensation				Answer
Long-term accrued income taxes				Answer
Long-term deferred tax liabilities				Answer
Other long-term liabilities				Answer
Total liabilities				Answer
Shareholders’ equity
Ordinary shares				-
Retained earnings				Answer
Accumulated other comprehensive (loss)				Answer
Total shareholders’ equity				Answer
Total liabilities and shareholders’ equity				Answer

Answer 1

Answer -

Medtronic PLC
Forecasted Consolidated Balance Sheet
($ millions)	Est. 2017
Current assets:
Cash and cash equivalents	$5775
Investment	$9758
Accounts receivable	$7456
Inventories	$4636
Tax assets	$927
Prepaid expenses and other current assets	$1661
Total current assets	$30213
Property, plant and equipment, net	$5317
Goodwill	$41500
Other intangible assets, net	$24968
Long-term tax assets	$1854
Other assets	$2086
Total assets	$105938
Current liabilities:
Short-term borrowings	$6176
Accounts payable	$2279
Accrued compensation	$2279
Accrued income taxes	$773
Other accrued expenses	$2936
Total current liabilities	$14443
Lon-term debt	$24071
Long-term accrued compensation	$1759
Long-term accrued income tax	$3902
Long-term deferred tax liabilities	$4984
Other long-term liabilities	$2550
Total liabilities	$51708
Shareholders equity:
Ordinary shares
Retained earnings	$56098
Accumulated other comprehensive (loss)	($1868)
Total shareholders equity	$54230
Total liabilities and shareholders equity	$105938

Calculation:

Here,

Forecasted 2017 net income = $5486 million

Forecasted 2017 net income = $38632 million

So,

1. Accounts receivable = $38632 * 19.3% = $7456

2. Inventories = $38632 * 12% = $4636

3. Tax assets = $38632 * 2.4% = $927

4. Prepaid expenses and other current assets = $38632 * 4.3% = $1661

5. Long-term tax assets = $38632 * 4.8% = $1854

6. Other assets = $38632 * 5.4% = $2086

7. Accounts payable = $38632 * 5.9% = $2279

8. Accrued compensation = $38632 * 5.9% = $2279

9. Accrued income tax = $38632 * 2% = $773

10. Other accrued expenses = $38632 * 7.6% = $2936

11. Long-term accrued income taxes = $38632 * 10.1% = $3902

12. Long-term deferred tax liabilities = $38632 * 12.9% = $4984

13. Other long-term liabilities = $38632 * 6.6% = $2550

14. CAPEX = $38632 * 3.6% = $1391

15. Depreciation expense = $4841 * 18.9% = $915

16. Property, plant and equipment, net:

Property, plant and equipment, net = ($4841 - Depreciation expense) + CAPEX

Property, plant and equipment, net = ($4841 - $915) + $1391 = $5317

17. Dividend paid = $5486 * 60.5% = $3319

18. Retained earnings:

Retained earnings = Prior period retained earnings + Net income - Dividend paid

Retained earnings = $53931 + $5486 - $3319 = $56098

19. Cash and cash equivalent:

Total assets = Total liabilities and shareholders equity

Cash and cash equivalent = Total liabilities and shareholders equity - Total assets excluding cash and cash equivalent

Cash and cash equivalent = $105938 - $100163

Cash and cash equivalent = $5775

20. Other intangible assets, net:

Other intangible assets, net = ($26899 - $ Amortization expense in 2016)

Other intangible assets, net = (26899 - $1931) = $24968

21. Short-term borrowings = Current maturities of debt due in 2018

Short-term borrowings = $6176

22. Long-term debt:

Long-term debt = ($30247 - Current maturities of debt due in 2018)

Long-term debt = ($30247 - $6176) = $24071