Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Hi every one, I need help with this one please Lets try to calculate the (projected) FCF of the firm LuluYoga for 2018. Here is

Hi every one, I need help with this one please

Lets try to calculate the (projected) FCF of the firm LuluYoga for 2018.

Here is some financial information you have gathered with the help of your intern peers and supervisors at the investment bank.

The analyst team has been talking to the management of LuluYoga and they estimate that sales are going to grow by 5% from 2017 to 2018.

Financial ratios that will allow you to compute the different component of FCF are in the table. Use the historical 3-year average for all financial ratios as your estimate of the financial ratio in 2018, with two exceptions: ARDOH and APDOH. You talked to senior managers of the firm and are very confident that in 2018 AR/DOH will be 45 and AP DOH will be 20.

The corporate tax rate is 35%

2015 2016 2017 2018 (projected)
Sales 4,000,000 6,000,000 9,000,000
COGS/Sales 60.20% 60.60% 60.40%
OpExp/Sales 23.00% 22.80% 22.60%
AR/DOH 29 35 36 45
Inv DOH 45 44 46
NFATO 13 13.5 13.2
AP DOH 20 20
Initial inventory 196,877

Answer the following questions. (When you fill in the blanks, dont keep any decimal points, but rather round your answer. For example, if your computation shows 100.7, then enter 101. )

What is the NOP in 2018?

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_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

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

Get Started

Students also viewed these Accounting questions