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Projecting NOPAT and NOA Using Parsimonious Forecasting Method Following are Target s sales, net operating profit after tax ( NOPAT ) , and net operating
Projecting NOPAT and NOA Using Parsimonious Forecasting Method
Following are Targets sales, net operating profit after tax NOPAT and net operating assets NOA for its year ended February $ millions
Note: Complete the entire question using the following Excel template: Excel Template. Then enter the answers into the provided spaces below with two decimal places.
Financial information
Sales $
Net operating profit after tax NOPAT
Net operating assets NOA
Use the parsimonious method to forecast Targets sales, NOPAT, and NOA for years ended February through using the following assumptions.
Note: Complete the entire question in Excel template provided above Using Excel, format each answer to two decimal places. Use Increase Decimal or Decrease Decimal to adjust decimal places. Do not round answers. Then enter the answers into the provided spaces below with two decimal places
Note: When completing the question in Excel, refer directly to the cells containing these assumptions, ie don't type the NOPM number when making a calculation, refer to the cell.
Note: Use negative signs with answers, when appropriate.
Assumptions
Sales growth per year
Net operating profit margin NOPM
Net operating asset turnover NOAT based on NOA at February
$ millions Actual Est. Est. Est. Est.
Sales Answer
Answer
Answer
Answer
NOPAT Answer
Answer
Answer
Answer
NOA Answer
Answer
Answer
Answer
a Does forecasted cash deviate from the normal level for this company?
Calculate the company's normal cash level as a percentage of sales.
Normal cash as a of sales
Using the answer above, compute what should be the normal cash balance for Fv
Normal eash balance for FY
b Is the deviation in part a large enough to require adjustment? Explain.
Yes. The deviation is large enough to require an adjustment.
c Identify three wrays to adjust the forecasted cash balance.
Which option would least likely be used to adjust the cash balance?
d Complete the following statement of cash flows assuming longterm debt is used to adjust the forecasted cash balance.
e Complete the following statement of cash flows assuming marketable securities are used to adjust the forecasted cash balance.
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