Forecasting an Income Statement Assume Abercrombie & Fitch reports the following

Question

Forecasting an Income Statement
Assume Abercrombie & Fitch reports the following income statements.

Forecast Abercrombie & Fitch’s fiscal 2014 income statement assuming the following income statement relations ($ in thousands). All percentages, other than sales growth and provision for income taxes, are based on percent of net sales.

Instructions: Round answers to the nearest whole number. Do not use negative signs with your answers. Remember to use rounded forecasted net sales with subsequent calculations.

Incorrect
0.00 points out of 1.00

Incorrect
0.00 points out of 1.00

Income Statement, For Fiscal Years Ended ($ thousands) Feb. 2, 2013 Jan. 28, 2012 Jan, 29, 2011 Net sales $ 4,510,805 $ 4,158,058 $ 3,468,777 Cost of goods sold 1,694,096 1,607,834 1,251,348 Gross profit 2,816,709 2,550,224 2,217,429 Stores and distribution expense 1,987,926 1,888,248 1,589,501 Marketing, general and administrative expense 473,883 437,120 400,804 Other operating expense (income), net (19,333) 3,472 (10,056) Operating income 374,233 221,384 237,180 Interest expense, net 7,288 3,577 3,362 Income from continuing operations before taxes 366,945 217,807 233,818 Tax expense from continuing operations 129,934 74,669 78,109 Net income from continuing operations 237,011 143,138 155,709 Income from discontinued operations, net of tax -- 796 -- Net income $ 237,011 $ 143,934 $ 155,709

Explanation / Answer

Solution:

Forecasted Income Statement, For Fiscal Years Ended ($ thousands) 2013 2014 Est. Net sales $4,510,805 $4,961,886 = $4,510,805 * 1.1 Cost of goods sold 1,694,096 $1,835,898 = $4,961,886 * 37% Gross profit 2,816,709 $3,125,988 Stores and distribution expense 1,987,926 $2,183,230 = $4,961,886 * 44% Marketing, general and administrative expense 473,883 $545,807 = $4,961,886 * 11% Other operating expense (income), net -19,333 ($19,333) Operating income 374,233 $416,284 = $3,125,988 - $2,183,230 - $545,807 - ($19,333) Interest expense, net 7,288 $7,288 Income from continuing operations before taxes 366,945 $408,996 Tax expense from continuing operations 129,934 $143,149 = $408,996 * 35% Net income from continuing operations 237,011 $265,847 Income from discontinued operations, net of tax - $0 Net income $237,011 $265,847

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