Projecting NOPAT and NOA Using Parsimonious Forecasting Method

Following are Target$$s sales, net operating profit after tax $($NOPAT$),$ and net operating assets $($NOA$)$ for its year ended February $2,2019($$ 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 $$75,356$

Net operating profit after tax $($NOPAT$)3,264$

Net operating assets $($NOA$)21,016$

Use the parsimonious method to forecast Target$$s sales, NOPAT, and NOA for years ended February $2020$ through $2023$ 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, i$.$e$.,$ 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 $3\mathrm{.}60\%$

Net operating profit margin $($NOPM$)4\mathrm{.}33\%$

Net operating asset turnover $($NOAT$),$ based on NOA at February $2,20193\mathrm{.}59$

$ millions $2019$ Actual $2020$ Est. $2021$ Est. $2022$ Est. $2023$ Est.

Sales $75,356\mathrm{.}00$ Answer $1$

Answer $2$

$0$

Answer $3$

$0$

Answer $4$

$0$

NOPAT $3,264\mathrm{.}00$ Answer $5$

$0$

Answer $6$

$0$

Answer $7$

$0$

Answer $8$

$0$

NOA $21,016\mathrm{.}00$ Answer $9$

$0$

Answer $10$

$0$

Answer $11$

$0$

Answer $12$

$0$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$2020.$

Normal eash balance for FY$2030$

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 long$-$term 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.