Following are Cisco Systems’ sales, net operating profit after tax (NOPAT), and

Question

Following are Cisco Systems’ sales, net operating profit after tax (NOPAT), and net operating assets (NOA) for its year ended July 31, 2016 ($ millions).

Use the parsimonious method to forecast Cisco’s sales, NOPAT, and NOA for years 2017 through 2020 using the following assumptions.

for 2017 and

thereafter

Rounding instructions:

Round total revenue "unrounded" to two decimal places.

Round total revenue "rounded", NOPAT and NOA answers to the nearest whole number.

For NOPAT and NOA computations, use total revenue "rounded".

$ millions

Incorrect
Mark 0.00 out of 1.00

Sales $49,247 Net operating profit after tax (NOPAT) 10,575 Net operating assets (NOA) 26,472

Explanation / Answer

Note :

2018 Est 2019 Est 2020 Est Total revenue (unrounded) ($49,247 * 101 % ) = $49,739.47 ($49,739.47 * 102 %) = $50,734.26 ($50,734.26 * 102 % ) = $51,748.94 ($51,748.94 * 102 %) = $52,783.92 Total revenue (rounded) $49,739 $50,734 $51,749 $52,784 NOPAT (total revenue * 21.5%) ($49,739 * 21.5%) = $10,694 ($50,734 * 21.5%) = $10,908 ($51,749 * 21.5%) = $11,126 ($52,784 * 21.5%) = $11,349 NOA (total revenue / 1.86) ($49,739 / 1.86) = $26,741 ($50,734 / 1.86) = $27,276 ($51,749 / 1.86) = $27,822 ($52,784 / 1.86) = $28,378

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