Income statement and vertical analysis

FORECASTING

Timeline	Values	Forecast	Lower Confidence Bound	Upper Confidence Bound
2016	79920
2017	79139
2018	79590	79590	79590.00	79590.00
2019		79265.826216	78555.10	79976.55
2020		79051.978032	78327.32	79776.64
The sales revenue in 2019 and 2020 are expected to drop to $79.265 billion and $79.051 billion respectively.
Assumptions
1. The level of competition is likey to increase because of the high profits thus attracting more firms into the industry
2. The cost of production is expected to increase through increased advertisement thus lowerin the net income of the organization.
3. The equity of the organization may decrease as a result of low profitability thus lowering the capital requirement of the organization.

Values 79920 79139 79590 Forecast 2016 2017 2018 2019 2020 79590 79265.826215999987 79051.978031999985 Lower Confidence Bound 2016 2017 2018 2019 2020 79590 78555.101333920378 78327.317072989492 Upper Confidence Bound 2016 2017 2018 2019 2020 79590 79976.551098079595 79776.638991010477

RATIOS

Ratio	IBM	HPE	ACN	ORCL	SAP
Current ratio	1.29	1	1.4	3.98	1.57
Debt to equity	2.71	0.57	0.01	1.29	0.4
Inventory% of TA	1.36%	4.41%
Inventory Turnover	25.36	8.81
NCA% of TA	60.17%	68.88%	44.43%	44.66%	67.72%
NPPE% of TA	8.75%	11.06%	5.17%	4.30%	6.90%
Total asset Turnover	0.65	0.56	1.45	0.29	0.48
Gross margin	46.41%	30.12%	30.81%	79.53%	69.90%
Operating margin	15.31%	6.02%	14.59%	33.68%	23.09%
Profit margin	10.96%	6.18%	11.06%	9.11%	16.63%
Return on investment	21.80%	5.60%	54.25%	13.95%	16.46%
Return on equity	51.52%	9.46%	32.68%	7.65%	14.16%
Return on assets	7.07%	3.63%	16.27%	2.60%	7.94%
R & D% of TR	6.76%	5.39%		15.29%	14.67%
Selling & Admin% of TR	24.82%	16.03%	15.87%	24.40%	31.89%
REVENUE	79920	79139	79590
YEAR	2016	2017	2018

Expenses

Categorization of expenses
Expenses	Variable cost	Fixed cost	Product cost	Period cost
Research development		X	X
Selling general and administrative	X			X
Interest expense	X			X
Income tax	X			X
Cost of revenue	X		X