Refine Assumptions for Dividend and Retained Earnings Forecast Provided below is

Question

Refine Assumptions for Dividend and Retained Earnings Forecast
Provided below is FY2016 information for Medtronic PLC.

a. Use the financial statements along with the additional information below to forecast retained earnings for FY2017.

Forecasted retained earnings $Answer million

b. Suppose the MD&A section of the Form 10-K and additional guidance from the company reveals the following additional information.

At FY2016 year-end (April 29, 2016), the company had approximately 1,400 million shares issued and outstanding. Use this information to refine your forecast of retained earnings for FY2017.

Forecasted retained earnings $Answer million

Medtronic plc Consolidated Statement of Income ($ millions) Apr. 29, 2016 Net sales $29,610 Costs and expenses Cost of products sold 9,142 Research and development expenses 2,224 Selling, general, and administrative expense 9,469 Special charges (gains), net 70 Restructuring charge, net 290 Certain litigation charges, net 26 Acquisition-related items 283 Amortization of intangiable assets 1,931 Other expense, net 107 Operating profit 6,068 Interest expense, net 955 Income from operations before income taxes 5,113 Provision for income taxes 971 Net income $4,142

Explanation / Answer

1 Apr.29,2016 Op. bal.of Retained earnings 54153 Add: Forecasted net income for FY 2017 5033 59186 Less: Dividends forecast to shareholders of 2016 2205 Forecasted retained earnings for FY ending 2017 56981 Millions 2 Apr.29,2016 Op. bal.of Retained earnings 54153 Add: Forecasted net income for FY 2017 5033 59186 Less: Dividends forecast to shareholders of 2016 (1400*1.75) 2450 Forecasted retained earnings for FY ending 2017 56736 Millions

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