Question

Following are the forecasted income statement and balance sheet for Lockheed Martin Corporation for the year ended December 31, 2017. Prepare a forecasted statement of cash flows for the company for 2017.

LOCKHEED MARTIN CORPORATION Consolidated Balance Sheet At December 31,

(in millions)	2017 Forecasted		2016 Actual
Cash and equivalents	$ 6,715		$ 1,837
Receivables, net	9,526		8,202
Inventories, net	5,385		4,670
Other current assets	399		399
Total current assets	22,025		15,108
Property, plant and equipment, net	5,358		5,549
Goodwill	10,764		10,764
Intangible assets, net	3,892		4,093
Deferred income taxes	6,625		6,625
Other noncurrent assets	5,667		5,667
Total assets	$54,331		$47,806
Accounts payable	$ 1,916		$ 1,653
Customer advances and amounts in excess of costs	7,829		6,776
Salaries, benefits and payroll taxes	2,026		1,764
Current portion of long-term debt	0		0
Other current liabilities	2,349		2,349
Total current liabilities	14,120		12,542
Long-term debt, net	14,282		14,282
Accrued pension liabilities	16,041		13,855
Other postretirement benefit liabilities	985		862
Other noncurrent liabilities	4,659		4,659
Total liabilities	$50,087		$46,200
Common stock	$ 289		$ 289
Retained earnings	15,962		13,324
Accumulated other comprehensive (loss)	(12,102	)	(12,102	)
Total stockholders' equity	4,149		1,511
Noncontrolling interests in subsidiary	95		95
Total equity	4,244		1,606
Total liabilities and equity	$54,331		$47,806

LOCKHEED MARTIN CORPORATION Consolidated Income Statement For the year ended December 31,

(in millions)	2017 Forecasted	2016 Actual
Net sales
Products	$46,420	$40,365
Services	8,328	6,883
Total net sales	54,748	47,248
Cost of sales
Products	42,103	36,616
Services	7,304	6,040
Severance and other charges	0	80
Other unallocated corporate costs	0	(550	)
Total cost of sales	49,407	42,186
Gross profit	5,341	5,062
Other operating income	487	487
Operating profit	5,828	5,549
Interest expense	663	663
Earnings before income taxes	5,165	4,886
Income tax expense	1,198	1,133
Net earnings from continuing operations	$ 3,967	$ 3,753
Net earnings (loss) from discontinued operations	0	1,549
Net earnings	$ 3,967	$ 5,302

The following assumptions were used to develop the forecasted financial statements:

Depreciation expense to start of year PPE, net	21.2%
Amortization expense to start of year intangible assets, net	4.9%
CAPEX to total net sales	1.8%
Dividends to net earnings	33.5%

Answer 1

Workings-

Calculation of Depreciation = $5,549 x 21.2% = $1177(Approx)
Calculation of Amortisation = $4,093 x 4.9% = $201

CAPEX to total net sales = 1.8%
Net sales = $54,748
CAPEX = $986 (approx) = (5,358 - 5,549) + (3,892 - 4,093) + Depreciation + $201
Or Depreciation = $986+191+201-201 = $1177

Dividend = 33.5% of $ 3,967 = $1329 (Approx)

Increase in Current Asset = (22,025 - $ 6,715) - (15,108 - $ 1,837) = $2039
Increase in Current Liability = (14,120 - 12,542) = $1578

Property, plant and equipment purchased during the year = $5,358 - (5,549 - 1177) = $986