Part 1
In the attached template you are provided with the FY2022 income statement for ABC Company and some additional assumptions. You are required to prepare the FY 2023 forecasted income statement for the company using only the provided information.
Part 2
Prepare a memo to the management of ABC Company addressing the following:
- Explain how the forecasted income statement was prepared, including the importance of using the assumptions. Do not explain how the numbers were calculated, this is what your formulas in Excel will show.
- Discuss at least two other methods that could have been used to prepare the forecast. Include the pros and cons and any limitations or potential errors of using those methods.
- Discuss at least one qualitative forecasting method that could also be incorporated to strengthen the reliability of the forecast in decision-making.
Your memo is required to be a minimum of two full pages in length. Your memo should be submitted as the body of your paper. Three scholarly articles that pertain to the topic as well please
MBA520 – Module 6
Forecasted Financial Statement – Income Statement
The FY2022 income statement for ABC Company is provided below.
Use the following assumptions to forecast ABC’s income statement for FY2023:
Net sales will increase by 2.0% (200 basis points) in FY2023.
Cost of sales: 75% of forecasted sales.
SG&A expenses: 18% of forecasted sales.
No announced divestitures for FY2023
Tax expenses as a percentage of pretax income: same as 2022
Benefit plan nonservice income is assumed to be zero.
The following line items remain unchanged in dollar terms:
Interest, net
Net earnings attributable to noncontrolling interests
ABC Company Income Statement
2022 Actual
Net sales
Cost of sales
Selling, general, and administrative expenses
Divestitures (gain)
Operating profit
Interest, net
Earnings before taxes and after-tax earnings from JV
Income taxes
Net earnings, including earnings attributable to NCI
Net earnings attributable to NCI
Net earnings attributable to ABC Company
18,870
14,153
2,936
30
1,752
525
1,227
215
1,012
35
977
Forecast
Assumption
2023
Forecasted
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
