Homework for Chapter 5: Problem #2 in the text (Chapter 5). NOTE: PLEASE USE THE ATTACHED EXCEL FILE TITLED Homework for Chapter 5 Excel" TO SOLVE THE FOLLOWING PROBLEM. NVIDIA Corp. financial statements are presented below. Analysts forecast that its 2018 sales will be $8,260. The expected 2018 tax rate will be 17.35%. Assume the firm pays 5% interest on short- term debt and 7% on long term debt. NVIDIA Corporation Income Statement (S in Millions) For the Years 2012 to 2017 Jan-17 Jan-16 Jan-15 Jan-14 Jan-13 Jan-12 Sales 6,910 5,010 4.682 4,130 4,280 3,998 Cost of Goods Sold 2,648 2,002 1,862 1.623 1,828 1,743 Gross Income 4,262 3,008 2.820 2,507 2,453 2,255 Research & Development 1,463 1,331 1,360 1,336 1,147 Other SG&A 641 532 443 436 431 398 Depreciation Expense 187 220 239 226 Other Operating Expense EBIT (Operating Income) 1,969 948 796 496 Nonoperating Income - Net 43 42 Interest Expense Unusual Expense - Net Pretax Income 1,905 755 Income Taxes 239 129 124 Net Income 1,666 614 631 440 984 197 648 56 201 743 563 0.00 Dividends per Share Shares Outstanding Tax Rate 0.49 649.00 12.55% 0.40 569.00 17.36% 0.34 563.07 16.46% 0.31 594.52 13.77% 0.08 624.96 15.03% 616.37 12.41% NVIDIA Corporation Balance Sheet (S in Millions) NVIDIA Corporation Balance Sheet (S in Millions) For the Years 2012 to 2017 Jan-17 Jan-16 Jan-15 Jan-14 Jan-13 Jan-12 497 253 1,766 5,032 826 2,876 596 4,441 SOS 418 3,297 454 420 336 794 1,151 3,521 426 388 139 5,625 1,283 700 93 4,127 474 483 133 5,713 1,179 622 118 8,536 1.191 670 521 784 9,841 6,053 1,100 634 4.775 1.289 340 99 3,905 1,157 596 560 1.087 5,553 466 Assets Cash Short-Term Investments Accounts Receivable Inventories Other Current Assets Total Current Assets Gross Plant & Equipment Accumulated Depreciation Net Plant & Equipment Other Assets Total Assets Liabilities & Shareholders' Equity ST Debt & Current Portion LT Debt Accounts Payable Other Current Liabilities Total Current Liabilities Long-Term Debt Other Liabilities Total Liabilities Common Equity Total Liabilities & Shareholders' Equity 583 851 931 1,201 1,043 7,251 1.061 ,412 7,370 6 0.0 00 800.0 485.0 503.0 1.413.0 296.0 642.0 2,351.0 97 1,788.0 2,020 0.0 2.9 293.2 324,4 356.4 335.1 602.8 621.1 619.8 5949 896.0 948.4 976.2 930.0 1,398 1,371 489 475 589 456 2,783 2,794 1,585 1,407 4,418 4,456 4,828 4,146 7,2017,2516,4125 ,553 19 271 453 4,079 5,762 9.841 2,901 4.469 7,370 Use your judgement to forecast the items on the income statement and balance sheet with the percent of sales method. What is the discretionary financing needed in 2018? Is this a surplus or deficit? 1121 F G H I 3 C L D E NVIDIA Corporation Income Statement ($ in Millions) For the Years 2012 to 2017 Jan-18+ Jan-17 Jan-16 Jan-15 8,260 A 6,910 5,010 4,682 2,648 2,002 1,862 4,262 3,008 2,820 1,463 1,360 641 443 187 220 Jan-14 4,130 1,623 2,507 1,336 436 239 Jan-13 4,280 1,828 2,453 1.147 Jan-12 3,998 1.743 2,255 984 398 204 0 1,331 226 196 496 5 Sales 6 Cost of Goods Sold 7 Gross Income 8 Research & Development 9 Other SG&A 10 Depreciation Expense 11 Other Operating Expense 12 EBIT (Operating Income) 13 Nonoperating Income - Net 14 Interest Expense 15 Unusual Expense - Net 16 Pretax Income 17 Income Taxes 18 Net Income 19 20 Dividends per Share 21 Tax Rate 43 201 510 1,905 239 1,666 70 662 100 563 124 631 614 440 581 0.49 12.55% 0.40 17.36% 0.34 16.46% 0.31 13.77% 0.08 15.03% 0.00 12.41%! 22 23 - Forecast 24 25 Interest Rate 26 27 FactSet 2018 Revenue Forecast 28 FactSet 2018 Tax Rate Forecast 29 FactSet 2018 R&D Forecast 30 Sales Multiplier for Scenarios 31 DFN for Scenarios 32 D G H NVIDIA Corporation Balance Sheet($ in Millions) For the Years 2012 to 2017 Jan-18 Jan-17 Jan-16 Jan-15 Jan-14 Jan-13 Jan-12 .151 497 4,1273,521 474 426 1,766 596 5,0324,441 826 5 05 794 118 9 3 8,536 6,053 1,191 670 253 2,876 336 340 99 3,905 1,157 596 133 5,713 139 5,625 1.283 4,775 1,289 713 700 521 583 576 560 1.061 1.087 Assets Cash & Short-Term Investments Short-Term Investments Accounts Receivable Inventories Other Current Assets Total Current Assets Gross Plant & Equipment Accumulated Depreciation Net Plant & Equipment Other Assets Total Assets Liabilities & Shareholders' Equity ST Debt & Current Portion LT Debt Accounts Payable Other Current Liabilities Total Current Liabilities Long-Term Debt Other Liabilities Total Liabilities Common Equity Total Liabilities & Shareholders' Equity 784 9,841 1,043 7,251 7 7,201 5,553 2.9 324.4 800.0 485.0 503.0 1,788.0 2,020 1,413.0 296.0 642.0 2,351.0 6211 0.0 293.2 602.8 896.0 1,398 489 2,783 0.0 356.4 619.8 976.2 19 589 1,585 4,828 6,412 0.0 335.1 594.9 930.0 21 456 1,407 4,146 5,553 271 2.901 4,079 5,762 9,841 4.418 2,794 4.456 7,251 7,370 7,201 Shares Outstanding Discretionary Financing Needed Accumulated DFN Iteration Problem 21S Problem 2 BS + Complete the Excel Sheet and show formulas that were used