Balance Sheet, Liabilities

Question 1

Accounts payable

Answer 1

Grow last year’s AP (EOP) at the current period COGS growth rate

Question 2

Deferred revenue

Answer 2

Grow with revenue

Question 3

Accrued expenses

Answer 3

Grow with revenue or SG&A

Question 4

Taxes payable

Answer 4

Grow with the growth rate in tax expenses on income statement

Question 5

Deferred tax liabilities

Answer 5

• Grow with revenue
• Straight-lining is also acceptable in the absence of enough disclosures to fully understand the nature of the DTLs
• DTLs can be presented as both current and non-current liabilities

Question 6

Debt

Answer 6

• Additional borrowing / (paydown)
• Non-Revolver Debt (EOP)
• Additional borrowing / (Paydown)
• Revolver (EOP)

Question 7

Debt - Non-Revolver debt additional borrowing / (paydown)

Answer 7

Debt footnote usually provides schedule of future required principal payments, and interest rates and terms. However, most companies replaced maturing debt is with new debt to maintain capital structure so simply straight-lining is generally safer than reflecting debt reductions based on contractual maturities

Question 8

Debt - Non-Revolver Debt (EOP)

Answer 8

Subtotal of Non-revolver debt additional borrowings / (paydown)

Question 9

Debt - Revolver additional borrowing / (Paydown)

Answer 9

If there is a cash surplus forecast from the cash flow statement, debt is paid down and if there is a deficit more debt is raised

Question 10

Debt - Revolver (EOP)

Answer 10

Subtotal of Revolver additional borrowing / (Paydown)