Chapter 10
Forecasting Financial Statements
10-11
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website,
in whole or in part.
Exhibit 10.A
Walmart Stores—Income Statement Forecasts
(Problem 10.16)
Actuals Forecasts
Year 2010 2011 2012 Year +1 Year +2 Year +3 Year +4 Year +5
INCOME STATEMENT
Revenues 421,849 446,950 469,162 487,928 507,446 527,743 548,853 570,807
common size 100.0% 100.0% 100.0% 4.0% 4.0% 4.0% 4.0% 4.0%
rate of change 6.0% 5.0% Assume steady 4.0% revenue growth.
Cost of goods sold –314,946 –335,127 –352,488 –365,946 –380,584 –395,808 –411,640 –428,105
common size –74.7% –75.0% –75.1% –75.0% –75.0% –75.0% –75.0% –75.0%
rate of change 6.4% 5.2% Assume steady cost of goods sold as a percent of sales.
Gross Profit 106,903 111,823 116,674 121,982 126,861 131,936 137,213 142,702
common size 25.3% 25.0% 24.9% 25.0% 25.0% 25.0% 25.0% 25.0%
rate of change 4.6% 4.3% 4.5% 4.0% 4.0% 4.0% 4.0%
Sellin
g
,
g
eneral and administrative
expenses –81,361 –85,265 –88,873 –92,706 –96,415 –100,271 –104,282 –108,453
common size –19.3% –19.1% –18.9% –19.0% –19.0% –19.0% –19.0% –19.0%
rate of change 4.8% 4.2% Assume steady SG&A expense as a percent of sales.
Operating Profit 25,542 26,558 27,801 29,276 30,447 31,665 32,931 34,248
common size 6.1% 5.9% 5.9% 6.0% 6.0% 6.0% 6.0% 6.0%
rate of change 4.0% 4.7% 5.3% 4.0% 4.0% 4.0% 4.0%
–4.5% –4.2%
Interest income 201 162 187 231 311 430 581 765
common size 0.0% 0.0% 0.0% 2.6% 2.6% 2.6% 2.6% 2.6%
rate of change –19.4% 15.4% Assume 2.6% interest earned on avg balance in cash.
Interest expense –2,205 –2,322 –2,251 –2,308 –2,377 –2,448 –2,522 –2,597
common size –0.5% –0.5% –0.5% –4.2% –4.2% –4.2% –4.2% –4.2%
rate of change 5.3% –3.1% Weighted-average interest rate on financial liabilities.
Income before Tax 23,538 24,398 25,737 27,198 28,381 29,647 30,990 32,416
common size 5.6% 5.5% 5.5% 5.6% 5.6% 5.6% 5.6% 5.7%
rate of change 3.7% 5.5% 5.7% 4.3% 4.5% 4.5% 4.6%
Chapter 10
Forecasting Financial Statements
10-12
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website,
in whole or in part.
Income tax expense –7,579 –7,944 –7,981 –8,704 –9,082 –9,487 –9,917 –10,373
common size –1.8% –1.8% –1.7% –32.0% –32.0% –32.0% –32.0% –32.0%
rate of change 4.8% 0.5% Assume effective income tax rate equal to that of past two years.
Income (Loss) from discontinued
operations 1,034 –67 0 0 0 0 0 0
common size 0.2% 0.0% 0.0% 0.0 0.0 0.0 0.0 0.0
rate of change –106.5% –100.0% Explain assumptions
Net Income 16,993 16,387 17,756 18,495 19,299 20,160 21,073 22,043
common size 4.0% 3.7% 3.8% 3.8% 3.8% 3.8% 3.8% 3.9%
rate of change –3.6% 8.4% 4.2% 4.3% 4.5% 4.5% 4.6%
Net income attributable to noncontrollin
g
interests –604 –688 –757 –809 –809 –809 –809 –809
common size –0.1% –0.2% –0.2% 15% 15% 15% 15% 15%
rate of change 13.9% 10.0% Assume noncontrolling interests earn a 15% rate of return.
Net Income attributable to common
shareholders 16,389 15,699 16,999 17,686 18,490 19,350 20,264 21,234
common size 3.9% 3.5% 3.6% 3.6% 3.6% 3.7% 3.7% 3.7%
rate of change –4.2% 8.3% 4.0% 4.5% 4.7% 4.7% 4.8%
Other comprehensive income items 716 –2,056 823 0 0 0 0 0
common size 0.2% –0.5% 0.2% 0.0 0.0 0.0 0.0 0.0
rate of change –387.2% –140.0% Assume random walk with mean zero.
Comprehensive Income 17,709 14,331 18,579 17,686 18,490 19,350 20,264 21,234
common size 4.2% 3.2% 4.0% 3.6% 3.6% 3.7% 3.7% 3.7%
rate of change –19.1% 29.6% –4.8% 4.5% 4.7% 4.7% 4.8%
Chapter 10
Forecasting Financial Statements
10-13
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website,
in whole or in part.
Exhibit 10.B
Walmart Stores—Balance Sheet Forecasts (including CAPEX and PP&E) (Problem 10.16)
Actuals Forecasts
2010 2011 2012 Year +1 Year +2 Year +3 Year +4 Year +5
BALANCE SHEET
ASSETS:
Cash and cash equivalents 7,395 6,550 7,781 9,958 13,983 19,120 25,555 33,327
common size 4.1% 3.4% 3.8% Plug Plug Plug Plug Plug
rate of change –11.4% 18.8% Assume cash is the financial flexible account.
Accounts and notes receivable—net 5,089 5,937 6,768 7,106 7,462 7,835 8,227 8,638
common size 2.8% 3.1% 3.3% 5.0% 5.0% 5.0% 5.0% 5.0%
rate of change 16.7% 14.0% Assume accounts receivable grow at the same rate as sales.
Inventories 36,318 40,714 43,803 44,114 45,879 47,714 49,622 51,607
common size 20.1% 21.1% 21.6% 44.0 44.0 44.0 44.0 44.0
rate of change 12.1% 7.6% Assume ending inventory amounts to 44 days COGS.
Prepaid expenses and other current assets 2,960 1,774 1,588 1,652 1,718 1,786 1,858 1,932
common size 1.6% 0.9% 0.8% 4.0% 4.0% 4.0% 4.0% 4.0%
rate of change –40.1% –10.5% Assume growth with SG&A expenses, which grow with sales.
Current Assets of Discontinued Segments 131 0 0 0 0 0 0 0
common size 0.1% 0.0% 0.0% 0% 0% 0% 0% 0%
rate of change –100.0% Explain assumptions
Current Assets 51,893 54,975 59,940 62,830 69,041 76,455 85,261 95,504
common size 28.7% 28.4% 29.5% 29.9% 31.3% 33.1% 35.2% 37.5%
rate of change 5.9% 9.0% 4.8% 9.9% 10.7% 11.5% 12.0%
Property, plant, and equipment—at cost 154,489 160,938 171,724 184,224 196,724 209,224 221,724 234,224
common size 85.5% 83.2% 84.5%
rate of change 4.2% 6.7% PP&E assumptions – see schedule in forecast development
Accumulated depreciation –46,611 –48,614 –55,043 –64,254 –74,090 –84,552 –95,638 –107,349
common size –25.8% –25.1% –27.1%
rate of change 4.3% 13.2% See depreciation schedule in forecast development worksheet.
Goodwill 16,763 20,651 20,497 21,317 22,170 23,056 23,979 24,938
common size 9.3% 10.7% 10.1% 4.0% 4.0% 4.0% 4.0% 4.0%
rate of change 23.2% –0.7% Assume growth with sales.
Other assets 4,129 5,456 5,987 6,226 6,476 6,735 7,004 7,284
common size 2.3% 2.8% 2.9% 4.0% 4.0% 4.0% 4.0% 4.0%
rate of change 32.1% 9.7% Assume growth with sales.
Total Assets 180,663 193,406 203,105 210,343 220,319 230,918 242,330 254,601
common size 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
rate of change 7.1% 5.0% 3.6% 4.7% 4.8% 4.9% 5.1%
Chapter 10
Forecasting Financial Statements
10-14
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website,
in whole or in part.
Actuals Forecasts
2010 2011 2012 Year +1 Year +2 Year +3 Year +4 Year +5
LIABILITIES:
Accounts payable 33,557 36,608 38,080 38,131 39,806 41,398 43,054 44,777
common size 18.6% 18.9% 18.7% 38.0 38.0 38.0 38.0 38.0
rate of change 9.1% 4.0% Assume a 38 day payment period consistent with prior years.
Current accrued expenses 18,701 18,180 18,808 19,560 20,343 21,156 22,003 22,883
common size 10.4% 9.4% 9.3% 4.0% 4.0% 4.0% 4.0% 4.0%
rate of change –2.8% 3.5% Assume growth with SG&A expenses, which grow with sales.
Notes payable and short-term debt 1,031 4,047 6,805 7,009 7,219 7,436 7,659 7,889
common size 0.6% 2.1% 3.4% 3.0% 3.0% 3.0% 3.0% 3.0%
rate of change 292.5% 68.1% Assume 3% growth, consistent with rate of growth in total assets.
Current maturities of long-term debt 4,991 2,301 5,914 6,091 6,274 6,462 6,656 6,856
common size 2.8% 1.2% 2.9% 3.0% 3.0% 3.0% 3.0% 3.0%
rate of change –53.9% 157.0% Assume 3% growth, consistent with rate of growth in total assets.
Income taxes payable 157 1,164 2,211 2,277 2,346 2,416 2,488 2,563
common size 0.1% 0.6% 1.1% 3.0% 3.0% 3.0% 3.0% 3.0%
rate of change 641.4% 89.9% Assume 3% growth per year.
Current liabilities of discontinued operations 47 0 0 0 0 0 0 0
common size 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
rate of change –100.0% Explain assumptions
Current Liabilities 58,484 62,300 71,818 73,069 75,988 78,869 81,861 84,967
common size 32.4% 32.2% 35.4% 34.7% 34.5% 34.2% 33.8% 33.4%
rate of change 6.5% 15.3% 1.7% 4.0% 3.8% 3.8% 3.8%
Long-term debt obligations 43,842 47,079 41,417 42,660 43,939 45,257 46,615 48,014
common size 24.3% 24.3% 20.4% 3.0% 3.0% 3.0% 3.0% 3.0%
rate of change 7.4% –12.0% Assume 3% growth, consistent with rate of growth in total assets.
Deferred tax liabilities- noncurrent 6,682 7,862 7,613 7,841 8,077 8,319 8,568 8,826
common size 3.7% 4.1% 3.7% 3.0% 3.0% 3.0% 3.0% 3.0%
rate of change 17.7% –3.2% Assume 3% growth per year.
Redeemable noncontrolling interest 408 404 519 0 0 0 0 0
common size 0.2% 0.2% 0.3% 0.0% 0.0% 0.0% 0.0% 0.0%
rate of change –1.0% 28.5% Assume redeemed in Year +1.
Total Liabilities 109,416 117,645 121,367 123,570 128,004 132,446 137,045 141,807
common size 60.6% 60.8% 59.8% 58.7% 58.1% 57.4% 56.6% 55.7%
rate of change 7.5% 3.2% 1.8% 3.6% 3.5% 3.5% 3.5%
Chapter 10
Forecasting Financial Statements
10-15
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website,
in whole or in part.
SHAREHOLDERS’ EQUITY
Common stock + Additional paid in capital 3,929 4,034 3,952 4,207 4,406 4,618 4,847 5,092
common size 2.2% 2.1% 1.9% 2.0% 2.0% 2.0% 2.0% 2.0%
rate of change 2.7% -2.0% Assume steady percent of total assets.
Retained earnings 63,967 68,691 72,978 77,758 83,101 89,046 95,631 102,895
common size 35.4% 35.5% 35.9%
rate of change 7.4% 6.2% Add net income and subtract dividends; see dividends forecast box below.
Accum. other comprehensive income (loss) 646 –1,410 –587 –587 –587 –587 –587 –587
common size 0.4%
–
0.7%
–
0.3% 0.0 0.0 0.0 0.0 0.0
rate of change
–
318.3%
–
58.4% Add accumulated other comprehensive income items from income statement
Total Common Shareholders’ Equity 68,542 71,315 76,343 81,378 86,920 93,078 99,891 107,400
common size 37.9% 36.9% 37.6% 38.7% 39.5% 40.3% 41.2% 42.2%
rate of change 4.0% 7.1% 6.6% 6.8% 7.1% 7.3% 7.5%
Noncontrolling interests 2,705 4,446 5,395 5,395 5,395 5,395 5,395 5,395
common size 1.5% 2.3% 2.7% 0.0 0.0 0.0 0.0 0.0
rate of change 64.4% 21.3% Assume earnings attributable to noncontrolling interests paid in dividends.
Total Equity 71,247 75,761 81,738 86,773 92,315 98,473 105,286 112,795
common size 39.4% 39.2% 40.2% 41.3% 41.9% 42.6% 43.4% 44.3%
rate of change 6.3% 7.9% 6.2% 6.4% 6.7% 6.9% 7.1%
Total Liabilities and Equities 180,663 193,406 203,105 210,343 220,319 230,918 242,330 254,601
common size 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
rate of change 7.1% 5.0% 3.6% 4.7% 4.8% 4.9% 5.1%
Check figures: Balance Sheet A=L+OE? 0 0 0 0 0 0 0 0
Initial adjustment needed to balance the balance sheet:
–9,958 –13,983 –19,120 –25,555 –33,327
Dividends and share repurchases forecasts:
Common dividends: –5,306 –5,547 –5,805 –6,079 –6,370
–
30.0%
–
30.0%
–
30.0%
–
30.0%
–
30.0%
Assume dividend payout of net income.
Share repurchases –7,600 –7,600 –7,600 –7,600 –7,600
(7,600) (7,600) (7,600) (7,600) (7,600)
Assume $7,600 in share repurchases per year.
Total dividends: –12,906 –13,147 –13,405 –13,679 –13,970
Total dividends and share repurchases forecast amounts.
Chapter 10
Forecasting Financial Statements
10-16
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website,
in whole or in part.
Forecast Development: Capital Expenditures, Property, Plant and Equipment, and Depreciation
Capital Expenditures: CAPEX Forecasts:
2010 2011 2012 Year +1 Year +2 Year +3 Year +4 Year +5
CAPEX:
PP&E Acquired 12,699 13,510 12,898
PP&E Sold –489 –580 –532
Net CAPEX 12,210 12,930 12,366 12,500 12,500 12,500 12,500 12,500
Net CAPEX as a percent of:
Gross PP&E 8.5% 8.4% 7.7% 7.3% 6.8% 6.4% 6.0% 5.6%
Revenues 2.9% 2.9% 2.6% 2.6% 2.5% 2.4% 2.3% 2.2%
2.8%
Property, Plant and Equipment and Depreciation Property, Plant and Equipment and Depreciation Forecasts:
PP&E at cost: 2010 2011 2012 Year +1 Year +2 Year +3 Year +4 Year +5
Beg. balance at cost: 171,724 184,224 196,724 209,224 221,724
Add: CAPEX forecasts from above: 12,500 12,500 12,500 12,500 12,500
End balance at cost: 154,489 160,938 171,724 184,224 196,724 209,224 221,724 234,224
Accumulated Depreciation:
Beg. Balance: –55,043 –64,254 –74,090 –84,552 –95,638
Subtract: Depreciation expense forecasts from below: –9,211 –9,836 –10,461 –11,086 –11,711
End Balance: –46,611 –48,614 –55,043 –64,254 –74,090 –84,552 –95,638 –107,349
PP&E—net 107,878 112,324 116,681 119,970 122,634 124,672 126,086 126,875
Depreciation Expense Forecast Development: Depreciation expense forecast on existing PP&E:
Existing PP&E at cost: 171,724 8,586 8,586 8,586 8,586 8,586
Remaining balance to be depreciated. 116,681 108,095 99,509 90,922 82,336 73,750
PP&E Purchases: Depreciation expense forecasts on new PP&E:
Capex Year +1 12,500 625 625 625 625 625
Capex Year +2 12,500 625 625 625 625
Capex Year +3 12,500 625 625 625
Capex Year +4 12,500 625 625
Capex Year +5 12,500 625
Total Depreciation Expense 9,211 9,836 10,461 11,086 11,711
Depreciation methods: 2010 2011 2012
PPE at Cost 154,489 160,938 171,724
Avg Depreciable PPE 157,714 166,331
Depreciation Expense 7,600 8,100 8,400
Implied Avg. Useful Life in Years 19.5 19.8
Useful Life Forecast Assumption: (in years) 20.0
Chapter 10
Forecasting Financial Statements
10-17
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website,
in whole or in part.
Exhibit 10.C
Walmart Stores—Statement of Cash Flows Forecasts (Problem 10.16)
Actuals Forecasts
IMPLIED STATEMENT OF CASH FLOWS 2011 2012 Year +1 Year +2 Year +3 Year +4 Year +5
Net Income 16,387 17,756 18,495 19,299 20,160 21,073 22,043
Add back depreciation expense (net) 2,003 6,429 9,211 9,836 10,461 11,086 11,711
(Increase) Decrease in receivables—net –848 –831 –338 –355 –373 –392 –411
(Increase) Decrease in inventories –4,396 –3,089 –311 –1,765 –1,835 –1,909 –1,985
(Increase) Decrease in prepaid expenses 1,186 186 –64 –66 –69 –71 –74
(Increase) Decrease in other current assets (1) 131 0 0 0 0 0 0
Increase (Decrease) in accounts payable—trade 3,051 1,472 51 1,675 1,592 1,656 1,722
Increase (Decrease) in current accrued liabilities –521 628 752 782 814 846 880
Increase (Decrease) in income taxes payable 1,007 1,047 66 68 70 72 75
Increase (Decrease) in other current liabilities (1) –47 0 0 0 0 0 0
Net change in deferred tax assets and liabilities 1,180 –249 228 235 242 250 257
Net Cash Flows from Operations 19,133 23,349 28,091 29,711 31,063 32,612 34,218
(Increase) Decrease in property, plant, & equip. at cost –6,449 –10,786 –12,500 –12,500 –12,500 –12,500 –12,500
(Increase) Decrease in goodwill and nonamort. intangibles –3,888 154 –820 –853 –887 –922 –959
(Increase) Decrease in other noncurrent assets (2) –1,327 –531 –239 –249 –259 –269 –280
Net Cash Flows from Investing Activities –11,664 –11,163 –13,559 –13,602 –13,646 –13,692 –13,739
Increase (Decrease) in short-term debt 326 6,371 382 393 405 417 429
Increase (Decrease) in long-term debt 3,237 –5,662 1,243 1,280 1,318 1,358 1,398
Increase (Decrease) in redeemable noncontrolling interests –4 115 –519 0 0 0 0
Increase (Decrease) in common stock + paid in capital 105 –82 255 200 212 228 245
Increase (Decrease) in accum. OCI –2,056 823 0 0 0 0 0
Dividends and share repurchases –10,975 –12,712 –12,906 –13,147 –13,405 –13,679 –13,970
Increase (Decrease) in noncontrolling interests 1,053 192 –809 –809 –809 –809 –809
Net Cash Flows from Financing Activities –8,314 –10,955 –12,355 –12,084 –12,279 –12,486 –12,706
Net Change in Cash –845 1,231 2,177 4,025 5,137 6,435 7,772
Check Figure:
Net change in cash—Change in cash balance 0 0 0 0 0 0 0
Chapter 10
Forecasting Financial Statements
10-18
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website,
in whole or in part.
b. The increasing balances in cash through Year +5 result because cash flow from
operations and from new borrowing are more than sufficient to finance
Walmart’s growth and capital expenditures on property, plant, and equipment.
The excess cash presents a number of potential agency problems for financial
management of Walmart. Students can discuss how the excess cash is
underinvested because the rate of return expected on cash (2.6%) is lower than
the cost of debt and equity capital for Walmart; so the excess cash is value-
destroying. Students also can discuss how the excess cash creates agency
problems, in which the cash may be mismanaged (used for value-destroying
acquisitions) or subject to embezzlement. The excess cash also signals Walmart
shareholders that the firm is not utilizing company resources efficiently.
c. After the plug is changed from cash to dividends, the new financial statement
forecasts for Walmart are presented next in Exhibits 10.D–10.F. The benefits
from increasing cash dividend payments stem from reducing Walmart’s
exposure to the agency and underinvestment problems mentioned in
Requirement b above. Students also can consider whether the dividends provide
a significant yield for Walmart common shareholders and what they signal
about management’s expectations for persistent future cash flows. You also can
point out that the shift from plugging cash to dividends affects all these
statements (income statements, balance sheets, and cash flows).
Chapter 10
Forecasting Financial Statements
10-19
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website,
in whole or in part.
Exhibit 10.D
Walmart Stores—Revised Income Statement Forecasts (Problem 10.16)
Actuals Forecasts
Year 2010 2011 2012 Year +1 Year +2 Year +3 Year +4 Year +5
INCOME STATEMENT
Revenues 421,849 446,950 469,162 487,928 507,446 527,743 548,853 570,807
common size 100.0% 100.0% 100.0% 4.0% 4.0% 4.0% 4.0% 4.0%
rate of change 6.0% 5.0% Assume steady 4.0% revenue growth.
Cost of goods sold –314,946 –335,127 –352,488 –365,946 –380,584 –395,808 –411,640 –428,105
common size –74.7% –75.0% –75.1% –75.0% –75.0% –75.0% –75.0% –75.0%
rate of change 6.4% 5.2% Assume steady cost of goods sold as a percent of sales.
Gross Profit 106,903 111,823 116,674 121,982 126,861 131,936 137,213 142,702
common size 25.3% 25.0% 24.9% 25.0% 25.0% 25.0% 25.0% 25.0%
rate of change 4.6% 4.3% 4.5% 4.0% 4.0% 4.0% 4.0%
Selling, general and administrative expenses –81,361 –85,265 –88,873 –92,706 –96,415 –100,271 –104,282 –108,453
common size –19.3% –19.1% –18.9% –19.0% –19.0% –19.0% –19.0% –19.0%
rate of change 4.8% 4.2% Assume steady SG&A expense as a percent of sales.
Operating Profit 25,542 26,558 27,801 29,276 30,447 31,665 32,931 34,248
common size 6.1% 5.9% 5.9% 6.0% 6.0% 6.0% 6.0% 6.0%
rate of change 4.0% 4.7% 5.3% 4.0% 4.0% 4.0% 4.0%
Interest income 201 162 187 202 202 202 202 202
common size 0.0% 0.0% 0.0% 2.6% 2.6% 2.6% 2.6% 2.6%
rate of change –19.4% 15.4% Assume 2.6% interest earned on avg balance in cash.
Interest expense –2,205 –2,322 –2,251 –2,308 –2,377 –2,448 –2,522 –2,597
common size –0.5% –0.5% –0.5% –4.2% –4.2% –4.2% –4.2% –4.2%
rate of change 5.3% –3.1% Weighted-average interest rate on financial liabilities.
Income before Tax 23,538 24,398 25,737 27,170 28,272 29,419 30,612 31,853
common size 5.6% 5.5% 5.5% 5.6% 5.6% 5.6% 5.6% 5.6%
rate of change 3.7% 5.5% 5.6% 4.1% 4.1% 4.1% 4.1%
–32.2% –32.6% –31.0% –31.9%
Income tax expense –7,579 –7,944 –7,981 –8,694 –9,047 –9,414 –9,796 –10,193
common size –1.8% –1.8% –1.7% –32.0% –32.0% –32.0% –32.0% –32.0%
rate of change 4.8% 0.5% Assume effective income tax rate equal to that of past two years.
Chapter 10
Forecasting Financial Statements
10-20
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website,
in whole or in part.
Actuals Forecasts
Year 2010 2011 2012 Year +1 Year +2 Year +3 Year +4 Year +5
Income (Loss) from discontinued operations 1,034 –67 0 0 0 0 0 0
common size 0.2% 0.0% 0.0% 0.0 0.0 0.0 0.0 0.0
rate of change –106.5% –100.0% Explain assumptions
Net Income 16,993 16,387 17,756 18,476 19,225 20,005 20,816 21,660
common size 4.0% 3.7% 3.8% 3.8% 3.8% 3.8% 3.8% 3.8%
rate of change –3.6% 8.4% 4.1% 4.1% 4.1% 4.1% 4.1%
Net income attributable to noncontrolling interests –604 –688 –757 –809 –809 –809 –809 –809
common size –0.1% –0.2% –0.2% 15% 15% 15% 15% 15%
rate of change 13.9% 10.0% Assume noncontrolling interests earn a 15% rate of return.
Net Income attributable to common shareholders 16,389 15,699 16,999 17,666 18,416 19,195 20,007 20,851
common size 3.9% 3.5% 3.6% 3.6% 3.6% 3.6% 3.6% 3.7%
rate of change –4.2% 8.3% 3.9% 4.2% 4.2% 4.2% 4.2%
Other comprehensive income items 716 –2,056 823 0 0 0 0 0
common size 0.2% –0.5% 0.2% 0.0 0.0 0.0 0.0 0.0
rate of change –387.2% –140.0% Assume random walk with mean zero.
Comprehensive Income 17,709 14,331 18,579 17,666 18,416 19,195 20,007 20,851
common size 4.2% 3.2% 4.0% 3.6% 3.6% 3.6% 3.6% 3.7%
rate of change –19.1% 29.6% –4.9% 4.2% 4.2% 4.2% 4.2%