1) Calculate the following for 2010:
1. Net operating profit after tax (NOPAT) - assume the statutory tax rate is 20%
2. Net operating assets (NOA)
3. Net nonoperating obligations (NNO)
4. Sales growth (use this as short-term growth assumption for NOPAT and NOA in forecasts).
2) Use the residual operating income (ROPI) model to estimate the per share value of Jades
Company's equity, at July 30, 2010. The company's weighted average cost of capital is 9% and terminal growth rate is expected to be 4% (use 3 yr forecast horizon plus terminal value).
3) Use the Discount cash flow (DCF) model to estimate the per share value of Jades
Company's equity, at July 30, 2010. The company's weighted average cost of capital is 8% and terminal growth rate is expected to be 3%.
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Jades Balance Sheet at May 28
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($ thousands)
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2010
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2009
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Assets
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|
|
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Cash And Cash Equivalents
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$243,000
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$302,000
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Net Receivables
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161,300
|
128,100
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Inventory
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216,700
|
353,600
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Total Current Assets
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621,000
|
783,700
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Property Plant and Equipment
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3,066,000
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2,184,000
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Intangible Assets
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520,900
|
154,000
|
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Total Assets
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4,207,900
|
3,121,700
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|
|
|
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Accounts Payable
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$403,800
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$437,100
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Other Current Liabilities
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454,000
|
445,600
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Total Current Liabilities
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857,800
|
882,700
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Long Term Debt
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1,210,600
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491,600
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Other LT Liabilities (Debts)
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584,500
|
317,400
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Total Liabilities
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2,652,900
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1,691,700
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|
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|
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Common Stock
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1,000,000
|
1,000,000
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(200 million shares outstanding)
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Retained Earnings
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|
|
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Total Stockholders' Equity
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555,000
|
430,000
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Total Liabilities and Stockholders' Equity
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1,555,000
|
1,430,000
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Jades Company Income Statement for year end July
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($ thousands)
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2010
|
2009
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Total Revenue
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6,626,500
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5,567,100
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Cost of Revenue
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5,138,700
|
4,258,800
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Gross Profit
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1,487,800
|
1,308,300
|
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Selling General and Administrative
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641,700
|
534,600
|
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Other Operating Expenses
|
244,500
|
202,200
|
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Earnings Before Interest And Taxes
|
601,600
|
571,500
|
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Interest Expense
|
86,900
|
40,700
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Income Before Tax
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514,700
|
530,800
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Income Tax Expense
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145,200
|
153,700
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Net Income
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369,500
|
377,100
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