Using the forecasted income statement and balance sheet and additional notes provided in the attached excel file
Question:
Using the forecasted income statement and balance sheet and additional notes provided in the attached excel file (Final Exam, tabs Great Falls BS, and Great Falls IS), please answer the following questions:
a. Prepare a forecasted statement of cash flows for the company for 2020 assuming the following assumptions. Depreciation expense to start of year PPE, net 21.2% Amortization expense to start of year intangible assets, net 4.9% CAPEX to total net sales 1.8% Dividends to net earnings 33.5%
b. Assume that net sales will grow by 1.16%, 2.16%, 3.16% and 4.16% for the next five years 2020, 2021, 2022, 2023, and 2024. Use the parsimonious method of forecasting to project net operating profit after tax (NOPAT) and net operating assets (NOA) for 2020 through 2023, inclusive.
c. Describe the difference between the full forecast of financial statements and the parsimonious method. When is one preferable to the other? Please support your answer.
Financial Accounting
ISBN: 978-0078025549
3rd edition
Authors: J. David Spiceland, Wayne Thomas, Don Herrmann