Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Following are financial statement numbers and select ratios for Target Corp. for the fiscal year 2016 (ending January 28, 2017). Current Forecast Horizon Terminal Year

Following are financial statement numbers and select ratios for Target Corp. for the fiscal year 2016 (ending January 28, 2017).

Current Forecast Horizon Terminal Year
($ millions) 2016 2017 2018 2019 2020
Total revenues $69,495 $71,580 $73,727 $75,939 $78,217 $78,999
Net operating profit after tax (NOPAT) 3,302 3,436 3,539 3,645 3,754 3,792
Net operating assets (NOA) 21,128 21,757 22,409 23,082 23,774 24,012

Forecast assumptions and other financial information for Target are as follows:

Revenue growth 3%
Net operating profit margin (NOPM) 4.8%
Net operating asset turnover (NOAT) 3.29
Terminal growth rate 1%
Discount rate 7%
Shares outstanding in millions 556.2
Stockholders' equity $10,953
Net nonoperating obligations (NNO) $10,175

Use the residual operating income (ROPI) model to estimate the value of Targets equity, per share at fiscal year-end. Target Corp. shares closed at $53.82 per share on March 8, 2017, the date the 10-K was filed with the SEC. How does your valuation compare with this closing price?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

ISE Essentials Of Investments

Authors: Zvi Bodie, Alex Kane, Alan Marcus

12th International Edition

1265450099, 9781265450090

More Books

Students also viewed these Finance questions