ACCT 370 Week 7 Excel Project: Part 4 Example

Projected Financial Statements for Crocs, Inc., 2026-2027: Assumptions, Forecasts and a Balanced Balance Sheet

Assumptions

Revenue is built brand by brand because the two brands are moving in opposite directions, a choice supported by Curtis et al. (2014), who found that forecasting retailers' sales from their components, such as store growth and sales per store, produced more accurate forecasts than simple time-series models. Every driver rests on Crocs's own filed results (Crocs, Inc., 2026), so a reader can trace each one to Parts 1 to 3.

Projected Income Statements (in thousands)

Without another write-down, the forecast returns Crocs to net income of $653 million on revenue growth of under 1%. Operating margin recovers to 22.0% in 2026 and 22.5% in 2027, below the 24.9% of 2024 because the gross margin is assumed to stay lower under tariffs and SG&A eases only slightly.

Projected Balance Sheets at December 31 (in thousands)

Equity grows by net income plus stock compensation less buybacks, and both projected balance sheets balance with cash determined by the cash flow statement below. Other current assets, other current liabilities, deferred taxes and lease balances are held at their 2025 levels, a simplification stated here so it can be revisited: Crocs's lease liabilities have grown as it opened stores, and a fuller model would tie them to the store count. Long-term borrowings fall by the scheduled repayment, and the goodwill balance is held flat because no acquisition or further impairment is assumed. The result is a balance sheet that shrinks in debt and grows in cash, which reflects the assumption that management keeps buybacks below free cash flow.

Projected Statements of Cash Flows (in thousands)

Free cash flow of about $726 million in 2026 and $744 million in 2027 covers the planned repayments and buybacks, leaving cash to build. If management instead kept repurchases at 2025's pace of about $580 million, the cash balance would rise only slowly and the company would need its revolving credit facility to fund any large purchase, which is why the buyback assumption is the most important financing choice in the model. Revsine et al. (2018) note that a projection's cash flow statement is the test of its internal consistency, and here the change in cash equals the balance sheet change in both years.

Projected Ratios

The projected margins stay below 2024's peak and the returns fall as equity rebuilds, which keeps the forecast conservative rather than assuming a return to the best year on record. The current ratio rises because cash builds while current liabilities stay nearly flat, and the falling ratio of liabilities to equity follows from repayment and retained earnings rather than from any new equity. A lender reading these ratios would see a company whose interest burden is shrinking quickly, and an investor would see returns that stay high even as the equity base grows.

Sensitivity: A Further HEYDUDE Decline

If HEYDUDE revenue fell 15% in 2026 instead of 6%, revenue would drop by about $64 million, and if SG&A stayed fixed in dollars, operating income would fall by about $37 million, the gross profit lost at a 58% margin. More important, a further decline could trigger another review of the remaining $1.3 billion of HEYDUDE intangible assets, since the 2025 impairment followed a forecast revision of exactly this kind (Crocs, Inc., 2026). The Crocs Brand forecast matters less to the balance sheet but more to income: each percentage point of Crocs Brand growth adds about $33.9 million of revenue.

References

Crocs, Inc. (2026). Annual report on Form 10-K for the fiscal year ended December 31, 2025. U.S. Securities and Exchange Commission. https://www.sec.gov/Archives/edgar/data/1334036/000133403626000006/crox-20251231.htm

Curtis, A. B., Lundholm, R. J., & McVay, S. E. (2014). Forecasting sales: A model and some evidence from the retail industry. Contemporary Accounting Research, 31(2), 581-608. https://doi.org/10.1111/1911-3846.12040

Revsine, L., Collins, D. W., Johnson, W. B., Mittelstaedt, H. F., & Soffer, L. C. (2018). Financial reporting and analysis (7th ed.). McGraw-Hill Education.