Provided below are an analyst's forecasts of revenue, net operating profit after tax (NOPAT), and net operating assets (NOA) as of 12/31/2020 forAbbott Laboratories.($ millions) Reported 2020 2021Revenue:NOPAT:NOA:Forecast Horizon Period20222023$34,608.0 $36,684.5 $38,885.5 $41,218.7 $43,691.8$4,774.4 $5,060.9 $5,364.5 $5,686.4 $6,027.6$44,579.0 $47,253.7 $50,089.0 $53,094.3 $56,280.02024 Terminal PeriodThe following additional information is provided (dollar and share amounts in millions).Common shares outstanding: 1,771.230Net nonoperating obligations (NNO): $11,576.0Noncontrolling interest (NCI): $219.0Preferred stock: $0.0WACC: 4.0%Terminal growth: 2.0%According to the DCF model, what is the total value of the firm?According to the DCF model, what is the value per share ofcommon stock?Use the discounted cash flow (DCF) method to answer the following questions. Do not round intermediate calculations. All values other than per-shareamounts are shown in millions.The company's stock closed at $123.04 on 02/19/2021, thedate the 10-K was filed with the SEC. In comparing yourvaluation estimate (also known as 'intrinsic value') with theactual stock price, was the stock overvalued or undervalued,and why?$44,565.6$6,148.1$57,405.6$224,108.3$119.87 VOvervalued, because the stock price is more than intrinsic value

Here, WACC4%Terminal Growth2.00%$ millionsReported 2022Forecast Horizon PeriodTerminal…

Provided below are an analyst's forecasts of revenue, net operating profit after tax (NOPAT), and net operating assets (NOA) as of 12/31/2020 for Abbott Laboratories. Forecast Horizon Period 2022 2023 $34,608.0 $36,684.5 $38,885.5 $41,218.7 $43,691.8 $4,774.4 $5,060.9 $5,364.5 $5,686.4 $6,027.6 $44,579.0 $47,253.7 $50,089.0 $53,094.3 $56,280.0 ($ millions) Reported 2020 2021 Revenue: NOPAT: NOA: 2024 Terminal Period $44,565.6 $6,148.1 $57,405.6 The following additional information is provided (dollar and share amounts in millions). Common shares outstanding: 1,771.230 Net nonoperating obligations (NNO): $11,576.0 Noncontrolling interest (NCI): $219.0 Preferred stock: $0.0 WACC: 4.0% Terminal growth: 2.0%

Provided below are an analyst's forecasts of revenue, net operating profit after tax (NOPAT), and net operating assets (NOA) as of 12/31/2020 for Abbott Laboratories. Forecast Horizon Period 2022 2023 $34,608.0 $36,684.5 $38,885.5 $41,218.7 $43,691.8 $4,774.4 $5,060.9 $5,364.5 $5,686.4 $6,027.6 $44,579.0 $47,253.7 $50,089.0 $53,094.3 $56,280.0 ($ millions) Reported 2020 2021 Revenue: NOPAT: NOA: 2024 Terminal Period $44,565.6 $6,148.1 $57,405.6 The following additional information is provided (dollar and share amounts in millions). Common shares outstanding: 1,771.230 Net nonoperating obligations (NNO): $11,576.0 Noncontrolling interest (NCI): $219.0 Preferred stock: $0.0 WACC: 4.0% Terminal growth: 2.0%

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter8: Current And Contingent Liabilities

Section: Chapter Questions

Problem 2MCQ

See similar textbooks

Similar questions

Following are forecasts of sales, net operating profit after tax (NOPAT), and net operating assets (NOA) as of December 31, 2018, for Humana. Reported Horizon Period $ millions 2018 2019 2020 2021 2022 TerminalPeriod Sales $56,912 $57,766 $58,632 $59,512 $60,404 $61,008 NOPAT 2,492 2,542 2,580 2,619 2,658 2,684 NOA 4,032 4,097 4,158 4,221 4,284 4,327 Answer the following requirements assuming a discount rate (WACC) of 7.8%, a terminal period growth rate of 1%, common shares outstanding of 135.6 million, net nonoperating obligations (NNO) of $(6,129) million, which is negative because Humana’s nonoperating assets exceed its nonoperating liabilities, and no noncontrolling interest (NCI) on the balance sheet. (a) Estimate the value of a share of common stock using the residual operating income (ROPI) model as of December 31, 2018. Instructions: Round all answers to the nearest whole number, except for discount factors, shares outstanding (do not round), and…
Following are forecasts of Home Depot's sales, net operating profit after tax (NOPAT), and net operating assets (NOA) as of February 3, 2019, which the company labels fiscal 2018 S millions Sales NOPAT NOA Forecast Horizon Period Terminal Period 2021 Reported 2018 2019 2020 2022 $125,515 $134,301 $143,703 $153,761 $164,525 $167,816 14,005 15,042 16,095 17,221 18,427 29,633 31,705 33,924 36,299 38,840 18,795 39,616 Answer the following requirements assuming a discount rate (WACC) of 7.85%, a terminal period growth rate of 2%, common shares outstanding of 1,105 million, net nonoperating obligations (NNO) of $31,812 million. Required a Estimate the value of a share of Home Depot's common stock using the discounted cash flow (DCF) model as of February 3, 2019. Note: Do not round until your final answer; round your final answer to two decimal places. Stock price per share: s b. Home Depot stock closed at $220.47 on March 28, 2019, the date the Form 10-K was filed with the SEC. How does your…
Projecting NOPAT and NOA Using Parsimonious Forecasting Method Following are Logitech's sales, net operating profit after tax (NOPAT), and net operating assets (NOA) for its fiscal year ended March 31, 2019 ($ thousands). 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 Net sales Net operating profit after tax (NOPAT) Net operating assets (NOA) $2,788,322 211,362 571,823 Use the parsimonious method to forecast Logitech's sales, NOPAT, and NOA for fiscal years ended March 31, 2020 through 2023 using the following assumptions. Note: Complete the entire question in Excel (template provided above). Using Excel, format each answer to two decimal places. Use Increase Decimal or Decrease Decimal to adjust decimal places. Do not round answers. Then enter the answers into the provided spaces below with two decimal places_. Note: When completing the question…
Projecting NOPAT and NOA Using Parsimonious Forecasting Method Following are Logitech's sales, net operating profit after tax (NOPAT), and net operating assets (NOA) for its fiscal year ended March 31, 2019 ($ thousands). 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 Net sales $2,091,242 Net operating profit after tax (NOPAT) 158,522 Net operating assets (NOA) 428,867 Use the parsimonious method to forecast Logitech's sales, NOPAT, and NOA for fiscal years ended March 31, 2020 through 2023 using the following assumptions. Note: Complete the entire question in Excel (template provided above). Using Excel, format each answer to two decimal places. Use Increase Decimal or Decrease Decimal to adjust decimal places. Do not round answers. Then enter the answers into the provided spaces below with two decimal places.. Note: When completing the question…
Projecting NOPAT and NOA Using Parsimonious Forecasting Method Following are Logitech's sales, net operating profit after tax (NOPAT), and net operating assets (NOA) for its fiscal year ended March 31, 2019 ($ thousands). 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 Net sales Net operating profit after tax (NOPAT) Net operating assets (NOA) $2,091,242 158,522 428,867 Use the parsimonious method to forecast Logitech's sales, NOPAT, and NOA for fiscal years ended March 31, 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…
Shouldn't the operating expenses for 2020 be 8074.9? Forecasting an Income StatementADP reports the following income statement. AUTOMATIC DATA PROCESSING INC.Statement of Consolidated EarningsFor Year Ended June 30, 2019, $ millions Total revenues $14,175.2 Operating expenses 7,145.9 Systems development and programming costs 636.3 Depreciation and amortization 304.4 Total cost of revenues 8,086.6 Selling, general, and administrative expenses 3,064.2 Interest expense 129.9 Total expenses 11,280.7 Other income expense, net 111.1 Earnings before income taxes 3,005.6 Provision for income taxes 712.8 Net earnings $ 2,292.8 Forecast ADP’s 2020 income statement assuming the following income statement relations. All percentages (other than total revenue growth and provision for income taxes) are based on historic percent of total revenues. Total revenues growth 13% Depreciation and amortization $460.5 million Interest expense No change Other…
Refine Assumptions for PPE ForecastFollowing are the income statement and balance sheet for Medtronic PLC. Consolidated Statement of Income ($ millions) For Fiscal Year Ended April 26, 2019 Net sales $30,557 Costs and expenses Cost of products sold 9,155 Research and development expenses 2,330 Selling, general, and administrative expense 10,418 Amortization of intangible assets 1,764 Restructuring charges, net 198 Certain litigation charges, net 166 Other operating expense, net 258 Operating profit (loss) 6,268 Other nonoperating income, net (373) Interest expense 1,444 Income (loss) before income taxes 5,197 Income tax provision 547 Net income (loss) 4,650 Net (income) loss attributable to noncontrolling interests (19) Net income (loss) attributable to Medtronic $ 4,631 Consolidated Balance Sheet ($ millions) April 26, 2019 Current assets Cash and cash equivalents $ 4,393 Investments 5,455 Accounts receivable, less…
Refine Assumptions for PPE ForecastFollowing are the income statement and balance sheet for Medtronic PLC. Consolidated Statement of Income ($ millions) For Fiscal Year Ended April 26, 2019 Net sales $30,557 Costs and expenses Cost of products sold 9,155 Research and development expenses 2,330 Selling, general, and administrative expense 10,418 Amortization of intangible assets 1,764 Restructuring charges, net 198 Certain litigation charges, net 166 Other operating expense, net 258 Operating profit (loss) 6,268 Other nonoperating income, net (373) Interest expense 1,444 Income (loss) before income taxes 5,197 Income tax provision 547 Net income (loss) 4,650 Net (income) loss attributable to noncontrolling interests (19) Net income (loss) attributable to Medtronic $ 4,631 Consolidated Balance Sheet ($ millions) April 26, 2019 Current assets Cash and cash equivalents $ 4,393 Investments 5,455 Accounts receivable, less…
Forecast income statement - ALL FIGURES IN $ MILLION Financial year ending 31 March 2023 2024 2025 Revenue 165.0 180.0 210.0 Less: Operating expenses 120.0 128.0 145.0 Operating earnings before depreciation 45.0 52.0 65.0 Less: Depreciation 30.0 32.0 25.0 Earnings before interest and tax (EBIT) 15.0 20.0 40.0 Less: Interest expense 5.0 5.0 5.0 Earnings before tax 10.0 15.0 35.0 Less: Tax expense 2.8 4.2 9.8 Net profit (earnings) 7.2 10.8 25.2 In addition, you have collected the following information: Operating working capital (OWC) in each year will be 10% of revenue in that year Capital expenditure (capex) will be $25 million in each year The corporate tax rate is 28%. What is Electrix's free cash flow to the firm (FCF) in year 2025? Thanks!
Return on total assets ratio: net income/ average total assets 21,331/(321,195+225,248)/2= 0.07807= 7.8% (2020 year) 11588/(162,648+225,248)/2= 0.059= 6.0% (2019 year) Write financial analysis report.
Computing, Analyzing and Interpreting Residual Operating Income (ROPI) In its annual report for the fiscal year ended July 27, 2019, Cisco Systems reports the following ($ million): Net operating profit after tax (NOPAT) Net operating assets (NOA) beginning July 27, 2019 $3,404 $6,668 Assuming the following weighted average cost of capital (WACC), what is Cisco's residual operating income (ROPI) for the fiscal year ended July 27, 2019? WACC 7.6% ROPI $ 2,896.192 b. At what level of WACC would Cisco not report positive residual operating income for the year? WACC 51 %
Selected 2020 balance sheet and income statement information for Vkusno & Tochka Corporation and Tasty Treats, Inc., follows. ($ millions) Vkusno & Tochka Tasty Treats Sales Revenue Interest Expense Net Income Average Total Assets $96,040 $6,090 $27,786 $294,060 28,260 2,715 5,309 32,549 a. Compute the return on assets (ROA) for each company. Use the 25% statutory tax rate. Note: Round your answers to the nearest million dollars. Numerator ($ millions) + Denominator ($ millions) 0+ $ 0+$ Vkusno & Tochka's ROA $ Tasty Treats' ROA $ Vkusno & Tochka's PM $ Tasty Treats' PM Vkusno & Tochka's ROA Tasty Treats' ROA b. Disaggregate ROA into profit margin (PM) and asset turnover (AT) for each company. • Note: Round your answers to the nearest million dollars. $ Vkusno & Tochka's AT $ Tasty Treats' AT $ Numerator ($ millions) + Denominator ($ millions) 0$ 05 0+$ 0+ $ PM X % x % X 0 AT c. Discuss any differences in these ratios for each company. has the lower ROA ratio. has the higher PM ratio.…