Forecasting with the Parsimonious Method and Estimating Share Value Using the ROPI Model Following are income statements and balance sheets for Nike Inc.

NIKE INC.
Consolidated Income Statements
	May 31,	May 31,
For Year Ended ($ millions)	2019	2018
Revenues	$37,552	$34,941
Cost of sales	20,777	19,623
Gross profit	16,775	15,318
Demand creation expense	3,603	3,434
Operating overhead expense	8,591	7,617
Total selling and administrative expense	12,194	11,051
Interest expense (income), net	47	52
Other (income) expense, net	(75)	63
Income before income taxes	4,609	4,152
Income tax expense	741	2,296
Net income	$3,868	$1,856

NIKE INC.
Consolidated Balance Sheets
	May 31,	May 31,
$ millions	2019	2018
Current assets
Cash and equivalents	$4,288	$4,078
Short-term investments	189	956
Accounts receivable, net	4,101	3,358
Inventories	5,397	5,051
Prepaid expenses and other current assets	1,889	1,085
Total current assets	15,864	14,528
Property, plant and equipment, net	4,554	4,276
Identifiable intangible assets, net	272	274
Goodwill	148	148
Deferred income taxes and other assets	1,931	2,409
Total assets	$22,769	$21,635
Current liabilities
Current portion of long-term debt	$6	$6
Notes payable	9	323
Accounts payable	2,508	2,188
Accrued liabilities	4,810	3,138
Income taxes payable	220	144
Total current liabilities	7,553	5,799
Long-term debt	3,325	3,329
Deferred income taxes and other liabilities	3,213	3,087
Commitments and contingencies (Note 18)
Shareholders equity
Common stock at stated value:
Class A convertible315 and 329 shares outstanding	-	-
Class B1,253 and 1,272 shares outstanding	3	3
Capital in excess of stated value	6,876	6,129
Accumulated other comprehensive income (loss)	222	(88)
Retained earnings	1,577	3,376
Total shareholders equity	8,678	9,420
Total liabilities and shareholders equity	$22,769	$21,635

Required a. Compute net operating assets (NOA) and net nonoperating obligations (NNO) for 2019. The companys NNO is negative because cash exceeds debt. NOA: $Answer

NNO: $Answer

b. Compute net operating profit after tax (NOPAT) for 2019 assuming a federal and state statutory tax rate of 22%. Note: Round your answer to the nearest whole dollar. NOPAT: $Answer

c. Use the parsimonious forecast method, as shown in the Analysis Insight box on page 14-5, to forecast sales, NOPAT, and NOA for 2020 through 2023 using the following assumptions.

Sales growth	8%
Net operating profit margin (NOPM)	2019 ratios rounded to three decimal places
Net operating asset turnover (NOAT), year-end	2019 ratios rounded to three decimal places

Forecast the terminal period value assuming a 2% terminal period growth and using the NOPM and NOAT assumptions above. Note: Round your final answers to the nearest whole dollar.

Nike (NKE)			Forecast Horizon
	Reported					Terminal
($ millions)	2019	2020	2021	2022	2023	Period
Sales	Answer	Answer	Answer	Answer	Answer	Answer
NOPAT	Answer	Answer	Answer	Answer	Answer	Answer
NOA	Answer	Answer	Answer	Answer	Answer	Answer

d. Estimate the value of a share of Nikes common stock using the residual operating income (ROPI) model as of May 31, 2019; assume a discount rate (WACC) of 6.8% and common shares outstanding of 1,682 million. Note: Round your final answer to two decimal places (for example, round $15.555 to $15.56). Stock price per share: $Answer

e. Nikes stock closed at $86.70 on July 23, 2019, the date the Form 10-K was filed with the SEC. How does your valuation estimate compare with this closing price? AnswerStock price is overvaluedStock price is undervaluedStock price is appropriately valued