NCAT Corporation Consolidated Income Statements ($ Millions) 31 May 20 31 May 21 Sales $39,117 $36,397 Cost of Goods Sold 21643 20,441 Gross Profit $17,474 $15,956 Demand Creation expense 3,753 3,577 Operating Overhead expense 8,949 7,934 Total selling Administrative expenses $12,702 $11,511 Interest expense (income), net 49 54 Other (income) expense, net 78 66 Income before income taxes $4,801 4,325 Income tax expense 772 2,392 Net Income $4,029 $1,933 NCAT Corporation Consolidated Balance Sheets ($ Millions) 31 May 20 31 May 21 Current Assets Cash Equivalents $4,466 4,249 Short term Investments 197 996 Accounts receivable, net 4,272 3,498 Inventories 5,622 5,261 Prepaid expenses other current assets 1,968 1,130 Total current assets $16,525 $15,134 Property, plant equipment, net 4,744 4,454 Identifiable Intangible assets, net 283 285 Goodwill 154 154 Deferred Income taxes, other assets 2,011 2,509 Total Assets $23,717 $22,536 Current Liabilities Current Portion of long term debt 6 6 Notes Payable 9 336 Accounts Payable 2,612 2,279 Accrued Liabilities 5,010 3,269 Income taxes payable 229 150 Total current liabilities 7866 6040 Long term debt 3,464 3,468 Deferred Income taxes other liabilities 3,347 3,216 Shareholders' equity Common stock at stated value Class A Convertible 315 329 shares outstanding Class B 1,253 and 1,272 shares outstanding 3 3 Capital in excess of stated value 7,163 6,383 Accumulated other comprehensive income (loss) 231 92 Retained Earnings 1,643 3,517 Total shareholders' equity 9040 9811 Total Liabilities Shareholders' equity 23,717 22,536 i Compute net operating (NOA) and net nonoperating obligations (NNO) for 2021 The companys NNO is negative because cash exceeds debt ii Compute net operating profit after tax (NOPAT) for 2021, assuming a federal and state statutory tax rate of 22 iii Use the parsimonious forecast method shown in the Analysis Insight box in Exhibit 13 2 to forecast sales, NOPAT, and NOA for 2022 through 2025 using the following assumptions Sales growth 8 Net Operating Profit Margin (NOPM) 2020 ratios rounded to three decimal places Net Operating Asset Turnover (NOAT), year end 2020 ratios rounded to three decimal places iv Forecast the terminal period value assuming a 2 terminal period growth and using the NOPM and NOAT assumptions above v Estimate the value of a share of NCATs common stock using the discount cash flow (DCF) model as of May 31, 2021 assume a discount rate (WACC) of 6 8 and common shares outstanding of 1,682 million vi NCATs stock is currently trading at $72 as of the date of this valuation Articulate a comparison of the intrinsic share price you generate to the current market price per share Using Critical thinking, what may have caused this difference, if any As an equity analyst, what would your investment recommendation be based on your analysis

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NCAT Corporation Consolidated Income Statements ($ Millions) 31-May-20 31-May-21 Sales $39,117 $36,397 Cost of Goods Sold 21643 20,441 Gross Profit $17,474 $15,956 Demand Creation expense

NCAT Corporation
Consolidated Income Statements
($ Millions)	31-May-20	31-May-21
Sales	$39,117	$36,397
Cost of Goods Sold	21643	20,441
Gross Profit	$17,474	$15,956
Demand Creation expense	3,753	3,577
Operating Overhead expense	8,949	7,934
Total selling & Administrative expenses	$12,702	$11,511
Interest expense (income), net	49	54
Other (income) expense, net	-78	66
Income before income taxes	$4,801	4,325
Income tax expense	772	2,392
Net Income	$4,029	$1,933


NCAT Corporation
Consolidated Balance Sheets
($ Millions)	31-May-20	31-May-21

Current Assets
Cash & Equivalents	$4,466	4,249
Short-term Investments	197	996
Accounts receivable, net	4,272	3,498
Inventories	5,622	5,261
Prepaid expenses & other current assets	1,968	1,130
Total current assets	$16,525	$15,134
Property, plant & equipment, net	4,744	4,454
Identifiable Intangible assets, net	283	285
Goodwill	154	154
Deferred Income taxes, other assets	2,011	2,509
Total Assets	$23,717	$22,536

Current Liabilities
Current Portion of long-term debt	6	6
Notes Payable	9	336
Accounts Payable	2,612	2,279
Accrued Liabilities	5,010	3,269
Income taxes payable	229	150
Total current liabilities	7866	6040
Long-term debt	3,464	3,468
Deferred Income taxes & other liabilities	3,347	3,216

Shareholders' equity
Common stock at stated value:
Class A Convertible - 315 & 329 shares outstanding
Class B - 1,253 and 1,272 shares outstanding	3	3
Capital in excess of stated value	7,163	6,383
Accumulated other comprehensive income (loss)	231	-92
Retained Earnings	1,643	3,517
Total shareholders' equity	9040	9811
Total Liabilities & Shareholders' equity	23,717	22,536

i. Compute net operating (NOA) and net nonoperating obligations (NNO) for 2021. The companys NNO is negative because cash exceeds debt.

ii. Compute net operating profit after tax (NOPAT) for 2021, assuming a federal and state statutory tax rate of 22%.

iii. Use the parsimonious forecast method shown in the Analysis Insight box in Exhibit 13.2 to forecast sales, NOPAT, and NOA for 2022 through 2025 using the following assumptions. Sales growth 8% Net Operating Profit Margin (NOPM) 2020 ratios rounded to three decimal places Net Operating Asset Turnover (NOAT), year-end 2020 ratios rounded to three decimal places

iv. Forecast the terminal period value assuming a 2% terminal period growth and using the NOPM and NOAT assumptions above.

v. Estimate the value of a share of NCATs common stock using the discount cash flow (DCF) model as of May 31, 2021; assume a discount rate (WACC) of 6.8% and common shares outstanding of 1,682 million.

vi. NCATs stock is currently trading at $72 as of the date of this valuation. Articulate a comparison of the intrinsic share price you generate to the current market price per share. Using Critical thinking, what may have caused this difference, if any? As an equity analyst, what would your investment recommendation be based on your analysis?