Refine Assumptions for PPE 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 property, plant and equipment, net for fiscal year ended April 2020.
$ millions April 27, 2018
Actual April 26, 2019
Actual April 2020
Forecast
Net sales $29,953 $30,557 $33,002
CAPEX 1,068 1,134 Depreciation expense 821 895 Property, plant, and equipment, gross 10,259 10,920 Round to the nearest million.
Forecasted PPE, net for FY2020 $Answer
million
b. Suppose the company discloses in a press release that accompanies its year-end SEC filing that anticipated CAPEX for fiscal year ended April 2020 is $1.5 billion. Use this guidance to refine your forecast of property, plant and equipment, net for fiscal year ended April 2020.
$Answer
million