Polaris Industries produces a wide range of outdoor leisure vehicles including all-terrain vehicles (ATV's), motorcycles, and snowmobiles. Forecast the financial statements for Polaris for Year 6. Use the percent of sales method based on Year 5 and the assumptions listed below. Please note the ratios to sales provided in the table which are useful for making the forecast.
Sales decline by 5.5%. The cost of debt is 11.76%. The tax rate is 31%. The depreciation rate is 12%. CAPEX is $28,360. The following accounts are held constant: Goodwill, Long-term debt, and Common Stock. Cash is the PLUG account. No dividends.
Forecast the financial statements for Polaris. What is the change in the cash account from Year 5 to Year 6?
| Income Statement and Balance Sheet |
| As of December 31, Year 5 ($000s) |
| | Year 5 | Ratios | Forecast |
| Revenue | $1,908,459 | | $1,803,494 |
| COGS | 1,454,374 | 0.762067 | |
| SG&A | 213,114 | 0.111668 | |
| Dep. Exp. | 28,632 | | |
| EBIT | 212,339 | | |
| Int. Exp. | 4,713 | | |
| Income Before Tax | 207,626 | | |
| Income Taxes | 64,348 | | |
| Net Income | $143,278 | | |
| ASSETS | | | |
| Cash | $19,675 | | |
| Accounts Receivable | 354,313 | 0.185654 | |
| Total current assets | 373,988 | | |
| PP&E | 222,336 | | |
| Goodwill | 172,632 | | 172,632 |
| Total Assets | $768,956 | | |
| LIABILITIES AND OWNERS EQUITY | | | |
| Total Current Liabilities | 381,299 | 0.199794 | |
| Long Term Debt | 18,000 | | 18,000 |
| Total Liabilities | $399,299 | | |
| Owners Equity | | | |
| Common Stock | 417 | | 417 |
| Retained Earnings | 369,240 | | |
| Total Owners Equity | 369,657 | | |
| Total Liabilities and Owners Equity | $768,956 | | |
▸ -$132.146 million
▸ $135.146 million
▸ $139.157 million
▸ $146.187 million
▸ $154.821 million
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