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. $ millions Sales NOPAT NOA Forecast Horizon Period Reported 2018 2019 2020 2021 2022 $99,547 $106,515 $113,971 $121,949 $130,485 $133,095 Terminal Period 11,107 11,930 12,765 13.658 14,614 14,907 23,502 25,145 26,905 28,789 30,804 31,420 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 $25,230 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: $ 0 x b. Home Depot stock closed at $174.86 on March 28, 2019, the date the Form 10-K was filed with the SEC. How does your valuation estimate compare with this closing price?

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. $ millions Sales NOPAT NOA Forecast Horizon Period Reported 2018 2019 2020 2021 2022 $99,547 $106,515 $113,971 $121,949 $130,485 $133,095 Terminal Period 11,107 11,930 12,765 13.658 14,614 14,907 23,502 25,145 26,905 28,789 30,804 31,420 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 $25,230 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: $ 0 x b. Home Depot stock closed at $174.86 on March 28, 2019, the date the Form 10-K was filed with the SEC. How does your valuation estimate compare with this closing price?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

See similar textbooks

Similar questions

Computing and analyzing trend percents LO P1 2021 2020 2019 2018 2017 Sales $ 446,122 $ 293,501 $ 242,563 $ 173,880 $ 128,800 Cost of goods sold 221,100 145,365 122,206 87,101 63,112 Accounts receivable 21,592 17,140 16,664 10,137 8,784 Compute trend percents for the above accounts, using 2017 as the base year. For each of the three accounts, state whether the situation as revealed by the trend percents appears to be favorable or unfavorable.
2021 2020 2019 2018 2017 $ 394,032 199,466 19,071 $ 262,688 132,894 15,394 $ 205,225 $ 150,348 76,774 8,780 $ 112,200 56,100 Sales Cost of goods sold Accounts receivable 106,013 14,058 7,708 Compute trend percents for the above accounts, using 2017 as the base year. For each of the three accounts, state whether the situation as revealed by the trend percents appears to be favorable or unfavorable. Trend Percent for Net Sales: Numerator: Denominator: Trend percent 2021: % 2020: % 2019: % %3D 2018: % = 2017: % Is the trend percent for Net Sales favorable or unfavorable? Trend Percent for Cost of Goods Sold: Numerator: Denominator: Trend percent %3D 2021: % 2020: % 2019: % %3D 2018: % = 2017: %3D Is the trend percent for Cost of Goods Sold favorable or unfavorable? Trend Percent for Accounts Receivable: Numerator: Denominator: Trend percent %3D 2021: % 2020: % %3D 2019: % = 2018: % 2017: % %3D Is the trend percent for Accounts Receivable favorable or unfavorable? II II IL || II
2021 2020 2019 2018 2017 Sales Cost of goods sold Accounts receivable $ 479,191 246,837 23,289 $ 315,257 $ 247,260 $ 167,634 $ 120,600 162,481 18,379 129,153 16,888 87,443 9,807 61,506 8,249 Compute trend percents for the above accounts, using 2017 as the base year. For each of the three acco situation as revealed by the trend percents appears to be favorable or unfavorable. 2021: 2020: 2019: 2018: 2017: Trend Percent for Net Sales: Numerator: 1 Denominator: 1 1 Is the trend percent for Net Sales favorable or unfavorable? 2021: 2020: 2019: 2018: 2017: Trend Percent for Cost of Goods Sold: Numerator: Denominator: 1 1 1 Is the trend percent for Cost of Goods Sold favorable or unfavorable? 2021: 2020: 2019: 2018: 2017: Trend Percent for Accounts Receivable: Numerator: Denominator: Is the trend percent for Accounts Receivable favorable or unfavorable? = Trend percent % 9900 = % = % = % % Trend percent % % % % % 11 Trend percent = % % % = % %
What are the firm’s net profit margins for 2018 and 2019? Income Statements ($ in millions) Balance Sheets ($ in millions) 2018 2019 Assets 2018 2019 Sales Revenue $2,580 $2,865 Cash $70 $50 Less: Cost of goods sold $1,060 $1,500 Short-Term investments $35 $9 Less: Operating Expenses $105 $162 Accounts rec. 400 460 Less: Depreciation $85 $80 Inventory 490 556 Earnings before interest and taxes $1,330 $1,123 Total Current Assets $995 $1,075 Less: Interest paid $350 $380 Net fixed assets 1890 1,910 Taxable Income $980 $743 Less: Taxes (40%) $392 $297 Total assets $2,885 2,985 Net income $588 $446 Liabilities and Owner's Equity Dividends (45%) $265 $201 2018 2019 Additions to Retained Earnings $323 $245 Accounts payable $240 $210 Accruals $20 $20 Notes payable 65 74 Total Current…
What are the firm's days' sales outstanding for 2018 and 2019? Income Statements ($ in millions) Balance Sheets ($ in millions) 2018 2019 Assets 2018 2019 $1,265 | Cash $780 Short-Term investments $92 | Accounts rec. Sales Revenue $1,180 $35 $20 $660 $20 $5 Less: Cost of goods sold Less: Operating Expenses Less: Depreciation Earnings before interest and taxes Less: Interest paid $75 190 235 $50 Inventory $343 Total Current Assets $40 250 300 $405 $495 $560 $170 $150 | Net fixed assets 990 1,105 Taxable Income $235 $193 Less: Taxes (40%) $94 $77 Total assets $1,485 1,665 Net income $141 $116 Liabilities and Owner's Equity Dividends (45%) Additions to Retained Earnings $63 $52 2018 2019 $78 $64 Accounts payable $125 $100 Accruals $10 $10 Notes payable 35 40 Total Current Liabilities $170 $150 Long-term debt 598 790 Total Liabilities $768 $940 Common stock 554 498 Retained earnings Total Equity Total liab.& equity 163 $227 717 $725 $1,485 $1,665
Selected comparative financial statements of Korbin Company follow. KORBIN COMPANY Comparative Income Statements For Years Ended December 31 2021 2020 2019 Sales $ 510,880 $ 391,376 $ 271,600 Cost of goods sold 307,550 248,524 173,824 Gross profit 203,330 142,852 97,776 Selling expenses 72,545 54,010 35,851 Administrative expenses 45,979 34,441 22,543 Total expenses 118,524 88,451 58,394 Income before taxes 84,806 54,401 39,382 Income tax expense 15,774 11,152 7,995 Net income $ 69,032 $ 43,249 $ 31,387 KORBIN COMPANY Comparative Balance Sheets December 31 2021 2020 2019 Assets Current assets $ 53,905 $ 36,079 $ 48,229 Long-term investments 0 500 3,040 Plant assets, net 101,665 92,652 55,799 Total assets $ 155,570 $ 129,231 $ 107,068 Liabilities and Equity Current liabilities $ 22,713 $ 19,255 $ 18,737 Common stock 68,000 68,000 50,000 Other paid-in capital 8,500 8,500 5,556 Retained earnings 56,357 33,476…
CALCULATE THE EBITDA For the year ended December 31, Notes 2020 2019 Revenue ₱ 10,775,731.00 ₱ 11,334,976.00 Cost of Sales 7,175,540.00 7,552,700.00 Gross profit 3,600,191.00 3,782,276.00 General and Administrative expenses 3,278,202.00 3,417,740.00 Finance Cost Or Interest Expense 48,000.00 16,000.00 Net Income before Tax 273,989.00 348,536.00 Provision for Income Tax 82,197.00 104,561.00 NET INCOME AFTER TAX ₱ 191,792.00 ₱ 243,975.00 (See Notes to Financial Statement)
Selected information from Bigg Company's financial statements follows: Fiscal Year Ended December 31 2019 2018(in thousands) 2017 Gross sales $2,004,719 $1,937,021 $1,835,987 Less: Sales discounts 4,811 4,649 4,406 Less: Sales returns and allowances 2,406 2,324 2,203 Net sales $1,997,502 $1,930,048 $1,829,378 Cost of goods sold 621,463 619,847 660,955 Gross profit $1,376,039 $1,310,201 $1,168,423 Operating expenses 577,369 595,226 583,555 Operating income $798,670 $714,975 $584,868 Other income (expenses) 15,973 (6,140) (8,773) Net income $814,643 $708,835 $576,095 At December 31 2019 2018(in thousands) 2017 Accounts receivable $201,290 $195,427 $182,642 Less: Allowance for doubtful accounts 2,516 2,736 2,192 Net accounts receivable $198,774 $192,691 $180,450 Required: 1. Calculate the following ratios for 2018 and 2019. Round your answers…
2020 Revenue $432,000 Returns, allowances, discounts ($21,600) Cost of goods sold ($280,800) Operating expenses ($45,000) Net Income $84,600 Use the above information to calculated the gross margin/profit ratio.
Here are the abbreviated financial statements for Planner’s Peanuts: INCOME STATEMENT, 2019 Sales $ 5,000 Cost 3,900 Net income $ 1,100 BALANCE SHEET, YEAR-END 2018 2019 2018 2019 Assets $ 7,500 $ 12,100 Debt $ 833 $ 1,000 Equity 6,667 11,100 Total $ 7,500 $ 12,100 Total $ 7,500 $ 12,100 a. If sales increase by 10% in 2020 and the company uses a strict percentage of sales planning model (meaning that all items on the income and balance sheet also increase by 10%), what must be the balancing item? b. What will be the value of this balancing item?
Here are the abbreviated financial statements for Planner’s Peanuts: INCOME STATEMENT, 2022 Sales $ 5,000 Cost 3,900 Net income $ 1,100 BALANCE SHEET, YEAR-END 2021 2022 2021 2022 Assets $ 7,500 $ 12,100 Debt $ 833 $ 1,000 Equity 6,667 11,100 Total $ 7,500 $ 12,100 Total $ 7,500 $ 12,100 If sales increase by 10% in 2023 and the company uses a strict percentage of sales planning model (meaning that all items on the income and balance sheet also increase by 10%), what must be the balancing item? What will be the value of this balancing item?
Please help

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS