To value Henkel on an as-is basis, we proceed in six steps. In step 1, prepare a set of reorganized financial statements. To assure consistency, the reorganized financial statements should reconcile (i.e., net operating profit less adjusted taxes [NOPLAT] to net income, invested capital to total funds invested). Next, use the reorganized financial statements to calculate free cash flow. Free cash flow equals NOPLAT plus noncash operating expenses less investments in invested capital. In step 3, we recommend reconciling free cash flow to cash flow available to investors. Similar to the reconciliation process for NOPLAT and invested capital, reconciling cash flows prevents double counting or excluding critical cash flows. In step 4, create forecast ratios for each item in NOPLAT and invested capital. Use these forecast ratios to project future NOPLAT, invested capital, and consequently future free cash flow (step 5). In the final step, estimate the value of core operations by discounting free cash flow and continuing value at the weighted average cost of capital. To move from the value of core operations to equity value, add nonoperating assets and deduct debt and debt equivalents. The specifics of the process are as follows:

1.Prepare reorganized financial statements. A robust DCF requires three reorganized financial statements: NOPLAT and its reconciliation to net income, invested capital and its reconciliation to total funds invested, and the statement of retained earnings. The three statements will be used to calculate cash flow, as well as move from core operating value to enterprise value and enterprise value to equity value. Assignment II reorganized the financial statements for Henkel. If you have not done so already, make sure to reorganize the income statement and balance sheet into operating, nonoperating, and financial items.

Please answer question 1 and provide detailed solution. Thanks