Using the financial statement data provided, adapted from the financial statements of Marathon Petroleum, along with the following assumptions, estimate the value (per share) of the companys common stock. Note that the data and an Excel template^* you are encouraged to use are available on Blackboard

• Sales are expected to continue to grow at a rate of 6% per year for the next four years and 3% per year thereafter.
• The net operating profit margin is expected to remain at the same level, after adjusting for the lower expected tax rate of 21%, as in the prior year.
• The percentage of year-end net operating assets to sales is expected to remain at the same level as in the prior year.
• The differential between nonoperating assets and nonoperating liabilities is expected to remain at the same amount as in the prior year.
• The company faces a weighted average cost of capital of 8.5%.

Based on your projection of the implied value of the companys stock and given its current stock price of $30.89, would you be inclined to recommend purchasing or selling the companys stock?

2. You have concluded that due expected restructuring of the companys operations, changes in various assumptions need to be made, as listed below:

• The growth rate in sales will be 7% per year for 10 years, and then 2% per year thereafter.
• The net operating profit margin will increase to 3.5% each year.
• End-of-year net operating assets will increase to 56.0% of sales each year.
• The differential between nonoperating assets and nonoperating liabilities will remain at the same amount as in the prior year.
• The company will face a weighted average cost of capital of 8.0%.

Based on your new projection of the implied value of the companys stock and given its current stock price of $31.89, would you be inclined to recommend purchasing or selling the companys stock?

Balance Sheets				Income Statement
(millions)	2019	2018		(millions)	2019
Cash & equivalents	$1,527.0	$1,687.0		Sales	$124,112.0
Accounts receivable, net	5,632.0	5,853.0		Less: Cost of goods sold	110,243.0
Inventories	10,243.0	9,837.0		Gross profit	13,869.0
Other current assets	2,768.0	646.0		Less: Selling, gen. & admin. expenses	4,780.0
Total current assets	20,170.0	18,023.0		Less: Depr. & amort. expenses*	3,638.0
Property, plant, & equipment, gross	64,623.0	61,213.0		Operating profit (EBIT)	5,451.0
Less: Accumulated depreciation	19,008.0	16,155.0		Less: Interest expense	1,238.0
Property, plant, & equipment, net	45,615.0	45,058.0		Other income (expense)	(46.0)
Right-of-use leased assets	3,177.0	0.0		Income/(loss) from equity investments	394.0
Equity method investments	6,898.0	5,898.0		Less: Impairment of goodwill	1,197.0
Goodwill	20,040.0	20,184.0		Gain/(loss) on sale of assets	307.0
Other intangible assets	2,928.0	3,314.0		Earnings before tax	3,671.0
Other noncurrent assets	446.0	463.0		Less: Income tax expense	1,074.0
Total assets	$99,274.0	$92,940.0		Net income	$2,597.0
Current portion of long-term debt	$649.0	$474.0		Footnotes and miscellaneous data	2019
Current operating lease liabilities	666.0	70.0		*Depreciation expense	$3,266.0
Accounts payable	11,623.0	9,368.0		*Amortization expense	$372.0
Taxes payable	1,186.0	1,446.0		Cash flow from operating activities	$7,610.0
Other accrued expenses	1,126.0	1,152.0		Capital expenditures made	$4,154.4
Other current liabilities	897.0	708.0		Dividends paid	$1,403.0
Total current liabilities	16,147.0	13,218.0		Common shares outstanding	650.3
Long-term debt	27,491.0	26,401.0		Current stock price	$30.89
Long-term operating lease liabilities	2,511.0	579.0
Deferred taxes	5,792.0	4,864.0
Other long-term liabilities	2,908.0	2,825.0
Total liabilities	54,849.0	47,887.0
Common stock and add. paid-in capital	33,167.0	33,739.0
Retained earnings	26,003.0	24,633.0
Accum. other comp. income (loss)	(320.0)	(144.0)
Less: Treasury stock	14,425.0	13,175.0
Total equity	44,425.0	45,053.0
Total liabilities and equity	$99,274.0	$92,940.0