Forecast an Income Statement
Following is the income statement for Medtronic PLC for the year ended April 29, 2016.
| Consolidated Statements of Income | Apr. 29, 2016 | Apr. 24, 2015 | Apr. 25, 2014 | |||
| Net sales | $29,721 | $20,261 | $17,005 | |||
| Costs and expenses | ||||||
| Cost of products sold | 9,214 | 6,309 | 4,333 | |||
| Research and development expense | 2,224 | 1,640 | 1,477 | |||
| Selling, general, and administrative expense | 9,469 | 6,904 | 5,847 | |||
| Special charges (gains), net | 70 | (38) | 40 | |||
| Restructuring charges, net | 290 | 237 | 78 | |||
| Certain litigation charges, net | 26 | 42 | 770 | |||
| Acquisition-related items | 283 | 550 | 117 | |||
| Amortization of intangible assets | 1,931 | 733 | 349 | |||
| Other expense, net | 107 | 118 | 181 | |||
| Operating profit | 6,107 | 3,766 | 3,813 | |||
| Interest expense, net | 955 | 280 | 108 | |||
| Income from operations before income taxes | 5,152 | 3,486 | 3,705 | |||
| Provision for income taxes | 979 | 811 | 640 | |||
| Net income | $4,173 | $2,675 | $3,065 |
Use the following assumptions to prepare a forecast of the company’s income statement for FY2017.
| Net sales increase | 18% | ||||
| Cost of products sold | 31.7% | of net sales | |||
| Research and development expense | 7.7% | of net sales | |||
| Selling, general, and administrative expense | 32.8% | of net sales | |||
| Special charges (gains), net | $0 | ||||
| Certain litigation charges, net | $0 | ||||
| Restructuring charges, net | 75% | of 2016 expense | |||
| Acquistion-related items | 1.0% | of net sales | |||
| Amortization of intangible assets | No change | ||||
| Other expense, net and Interest expense, net | No change | ||||
| Provision for income taxes | 20% | of pre-tax income |
Instructions:
- Round answers to the nearest whole number.
- Use rounded answers for any subsequent computations.
- Do not use negative signs with any of your answers.
| Medtronic Inc. | ||||
| Forecasted Consolidated Statement of Income | ||||
| in Millions | EST. 2017 | |||
| Net sales | $Answer 35071
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| Costs and expenses | ||||
| Cost of products sold | Answer 11118
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| Research and development expense | Answer 2700
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| Selling, general, and administrative expense | Answer 11503
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| Restructuring charges, net | Answer 218
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| Acquisition-related items | Answer 351
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| Amortization of intangible assets | Answer 1931
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| Other expense, net | Answer 107
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| Operating profit | Answer 7143
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| Interest expense, net | Answer 955
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| Income from operations before income taxes | Answer 6188
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| Provision for income taxes | Answer 1238
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| Net income | $Answer 4950
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