year ended April 29, 201 We obta $ mi Net : Module 11 1 Forecasting Financial St

ID: 2580195 • Letter: Y

Question

year ended April 29, 201 We obta $ mi Net : Module 11 1 Forecasting Financial Statements A11-15. Adjust Apr 24, 2015 MI1-13. Forecast an Income Statemen Apr LO2 Following is the income statement for Medtronic PLC for the $28,833 $20,261 $17,005 ted Statements of Income (S millions)Apr 29, 2016 Mari 9,142 2,224 9,469 70 290 26 283 1,931 107 6,309 1,640 6,904 (38) 237 42 550 733 118 Net sales. Costs and expenses Cost of products sold. Research and Selling, general, and administrative expense 4333 1477 ,847 sold.otexpense Cas Tot Acquisition-related items Amortization of intangible assets.... 5,291 955 3,766 280 Operating profit Interest expense, net 4,336 798 3,486 811 $ 2,675 3,813 108 3,705 Requ De b. Is Id d. F Income from operations before income taxes... $ 3,085 Use the following assumptions to prepare a forecast of the company's income stat 22% 31.7% of net sales Net sales increase Research and development expense 7.7% of net Selling, general, and administrative expense. . . . . . . . . .. . . . . . . . . . 32.8% of net Special charges (gains), net and Certain litigation charges, net .. $0 Restructuring charges, net 75% of 2016 32.8% of net sales 1.0%me in S amount No change in $ amount 20% of Pre-tax income

Explanation / Answer

Medtronic Plc

Forecast for the company’s income statement for FY 2017:

Forecasted income statement for the financial year 2017

Net sales

$35,177

Costs and expenses:

Cost of products sold

$11,151

research and development expense

$2,709

Selling, general and administrative expenses

$11,538

Restructuring charges, net

$218

Acquisition-related items

Amortization of intangible assets

$1,931

Other expenses, net

$107

$27,657

Operating profit

$7,520

Interest expense, net

$955

Income from operations before income tax

$6,565

Provision for income taxes

$131

Net income

$6,434

Notes:

Net sales for FY 2017 = $28,833 + 22% of 28,833 = $35,177

Special charges (gains), net and certain litigation charges, net are $0 for FY 2017 and hence are not shown in the forecasted income statement.