Following is the balance sheet and income statement for CVS Health Corporation for the year ended December 31, 2016.
Required:
a. Calculate net operating profit after tax (NOPAT) for 2016. Assume a statutory tax rate of 37.0%.
b. Calculate net operating assets for 2016.
c. Use the parsimonious method of forecasting to project net operating profit after tax (NOPAT) and net operating assets (NOA) for 2017 and 2018. Assume that sales increase by 10% each year. Assume that net operating profit margin (NOP
M) and net operating asset turnover (NOA
T) remain unchanged from their 2016 levels. (Hint: Use year-end NOA rather than average NOA to compute 2016 NOA.)

Question

Following is the balance sheet and income statement for CVS Health Corporation for the year ended December 31, 2016. 
   Required: 
a. Calculate net operating profit after tax (NOPAT) for 2016. Assume a statutory tax rate of 37.0%.
b. Calculate net operating assets for 2016.
c. Use the parsimonious method of forecasting to project net operating profit after tax (NOPAT) and net operating assets (NOA) for 2017 and 2018. Assume that sales increase by 10% each year. Assume that net operating profit margin (NOP
M) and net operating asset turnover (NOA
T) remain unchanged from their 2016 levels. (Hint: Use year-end NOA rather than average NOA to compute 2016 NOA.)

Quizplus · Accepted Answer

The Answer of Following is the balance sheet and income statement for CVS Health Corporation for the year ended December 31, 2016. 
   Required: 
a. Calculate net operating profit after tax (NOPAT) for 2016. Assume a statutory tax rate of 37.0%.
b. Calculate net operating assets for 2016.
c. Use the parsimonious method of forecasting to project net operating profit after tax (NOPAT) and net operating assets (NOA) for 2017 and 2018. Assume that sales increase by 10% each year. Assume that net operating profit margin (NOP
M) and net operating asset turnover (NOA
T) remain unchanged from their 2016 levels. (Hint: Use year-end NOA rather than average NOA to compute 2016 NOA.)

Following Is the Balance Sheet and Income Statement for CVS