Refine Assumptions for Dividend and Retained Earnings Forecast Following are the income statement and balance sheet for Medtronic PLC. Consolidated Statement of Income ($ millions) For Fiscal Year Ended April 26, 2019 Net sales $30,557 Costs and expenses Cost of products sold 9,155 Research and development expenses 2,330 Selling, general, and administrative expense 10,418 Amortization of intangible assets 1,764 Restructuring charges, net 198 Certain litigation charges, net 166 Other operating expense, net 258 Operating profit (loss) 6,268 Other nonoperating income, net (373) Interest expense 1,444 Income (loss) before income taxes 5,197 Income tax provision 547 Net income (loss) 4,650 Net (income) loss attributable to noncontrolling interests (19) Net income (loss) attributable to Medtronic $ 4,631 Consolidated Balance Sheet ($ millions) April 26, 2019 Current assets Cash and cash equivalents $ 4,393 Investments 5,455 Accounts receivable, less allowances of $190 6,222 Inventories, net 3,753 Other current assets 2,144 Total current assets 21,967 Property, plant, and equipment, net 4,675 Goodwill 39,959 Other intangible assets, net 20,560 Tax assets 1,519 Other assets 1,014 Total assets $89,694 Current liabilities Current debt obligations $838 Accounts payable 1,953 Accrued compensation 2,189 Accrued income taxes 567 Other accrued expenses 2,925 Total current liabilities 8,472 Long-term debt 24,486 Accrued compensation and retirement benefits 1,651 Accrued income taxes 2,838 Deferred tax liabilities 1,278 Other liabilities 757 Total liabilities 39,482 Shareholders' equity Ordinary shares 0 Additional paid-in capital 26,532 Retained earnings 26,270 Accumulated other comprehensive loss (2,711) Total shareholders' equity 50,091 Noncontrolling interests 121 Total equity 50,212 Total liabilities and shareholders' equity $89,694 a. Use the financial statements along with the additional information below to forecast retained earnings for the fiscal year ended April 2020. Forecasted net income to Medtronic shareholders for fiscal 2020 $4,908 million Dividends to Medtronic shareholders in fiscal 2019 2,693 million Forecasted retained earnings $Answer million b. Suppose the MD&A section of the Form 10-K and additional guidance from the company reveals the following additional information. “Ordinary cash dividends declared and paid totaled 50.0 cents per share for each quarter of fiscal year 2019.” At year end April 26, 2019, the company had 1,340,697,595 shares issued and outstanding. Use this information to refine your forecast of retained earnings for the fiscal year ended April 2020.
Refine Assumptions for Dividend and Retained Earnings Forecast Following are the income statement and balance sheet for Medtronic PLC. Consolidated Statement of Income ($ millions) For Fiscal Year Ended April 26, 2019 Net sales $30,557 Costs and expenses Cost of products sold 9,155 Research and development expenses 2,330 Selling, general, and administrative expense 10,418 Amortization of intangible assets 1,764 Restructuring charges, net 198 Certain litigation charges, net 166 Other operating expense, net 258 Operating profit (loss) 6,268 Other nonoperating income, net (373) Interest expense 1,444 Income (loss) before income taxes 5,197 Income tax provision 547 Net income (loss) 4,650 Net (income) loss attributable to noncontrolling interests (19) Net income (loss) attributable to Medtronic $ 4,631 Consolidated Balance Sheet ($ millions) April 26, 2019 Current assets Cash and cash equivalents $ 4,393 Investments 5,455 Accounts receivable, less allowances of $190 6,222 Inventories, net 3,753 Other current assets 2,144 Total current assets 21,967 Property, plant, and equipment, net 4,675 Goodwill 39,959 Other intangible assets, net 20,560 Tax assets 1,519 Other assets 1,014 Total assets $89,694 Current liabilities Current debt obligations $838 Accounts payable 1,953 Accrued compensation 2,189 Accrued income taxes 567 Other accrued expenses 2,925 Total current liabilities 8,472 Long-term debt 24,486 Accrued compensation and retirement benefits 1,651 Accrued income taxes 2,838 Deferred tax liabilities 1,278 Other liabilities 757 Total liabilities 39,482 Shareholders' equity Ordinary shares 0 Additional paid-in capital 26,532 Retained earnings 26,270 Accumulated other comprehensive loss (2,711) Total shareholders' equity 50,091 Noncontrolling interests 121 Total equity 50,212 Total liabilities and shareholders' equity $89,694 a. Use the financial statements along with the additional information below to forecast retained earnings for the fiscal year ended April 2020. Forecasted net income to Medtronic shareholders for fiscal 2020 $4,908 million Dividends to Medtronic shareholders in fiscal 2019 2,693 million Forecasted retained earnings $Answer million b. Suppose the MD&A section of the Form 10-K and additional guidance from the company reveals the following additional information. “Ordinary cash dividends declared and paid totaled 50.0 cents per share for each quarter of fiscal year 2019.” At year end April 26, 2019, the company had 1,340,697,595 shares issued and outstanding. Use this information to refine your forecast of retained earnings for the fiscal year ended April 2020.
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter9: Long-term Liabilities
Section: Chapter Questions
Problem 103.4C
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Refine Assumptions for Dividend and
Following are the income statement and
Consolidated Statement of Income ($ millions)
For Fiscal Year Ended
|
April 26, 2019 |
---|---|
Net sales | $30,557 |
Costs and expenses | |
Cost of products sold | 9,155 |
Research and development expenses | 2,330 |
Selling, general, and administrative expense | 10,418 |
Amortization of intangible assets | 1,764 |
Restructuring charges, net | 198 |
Certain litigation charges, net | 166 |
Other operating expense, net | 258 |
Operating |
6,268 |
Other nonoperating income, net | (373) |
Interest expense | 1,444 |
Income (loss) before income taxes | 5,197 |
Income tax provision | 547 |
Net income (loss) | 4,650 |
Net (income) loss attributable to noncontrolling interests | (19) |
Net income (loss) attributable to Medtronic | $ 4,631 |
Consolidated Balance Sheet ($ millions) | April 26, 2019 |
---|---|
Current assets | |
Cash and cash equivalents | $ 4,393 |
Investments | 5,455 |
6,222 | |
Inventories, net | 3,753 |
Other current assets | 2,144 |
Total current assets | 21,967 |
Property, plant, and equipment, net | 4,675 |
39,959 | |
Other intangible assets, net | 20,560 |
Tax assets | 1,519 |
Other assets | 1,014 |
Total assets | $89,694 |
Current liabilities | |
Current debt obligations | $838 |
Accounts payable | 1,953 |
Accrued compensation | 2,189 |
Accrued income taxes | 567 |
Other accrued expenses | 2,925 |
Total current liabilities | 8,472 |
Long-term debt | 24,486 |
Accrued compensation and retirement benefits | 1,651 |
Accrued income taxes | 2,838 |
1,278 | |
Other liabilities | 757 |
Total liabilities | 39,482 |
Shareholders' equity | |
Ordinary shares | 0 |
Additional paid-in capital | 26,532 |
Retained earnings | 26,270 |
Accumulated other comprehensive loss | (2,711) |
Total shareholders' equity | 50,091 |
Noncontrolling interests | 121 |
Total equity | 50,212 |
Total liabilities and shareholders' equity | $89,694 |
a. Use the financial statements along with the additional information below to forecast retained earnings for the fiscal year ended April 2020.
Forecasted net income to Medtronic shareholders for fiscal 2020 | $4,908 million |
Dividends to Medtronic shareholders in fiscal 2019 | 2,693 million |
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. “Ordinary cash dividends declared and paid totaled 50.0 cents per share for each quarter of fiscal year 2019.”
At year end April 26, 2019, the company had 1,340,697,595 shares issued and outstanding. Use this information to refine your forecast of retained earnings for the fiscal year ended April 2020.
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