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. 

 

(In millions) Cash and equivalents Receivables, net Inventories, net Other current assets Total current assets Property, plant and equipment, net Goodwill Intangible assets, net Deferred income taxes Other noncurrent assets Total assets Great Falls Corporation Consolidated Balance Sheet At December 31, 2020 Accounts payable Customer advances and amounts in excess of costs Salaries, benefits and payroll taxes Current portion of long-term debt Other current liabilities Total current liabilities Long-term debt, net Accrued pension liabilities Other postretirement benefit liabilities Other noncurrent liabilities Total liabilities Common stock Retained earnings 2020 forecasted $9.715 $12,526 $8,385 $3,399 $25,025 $8,358 $10,588 $6,892 $9,625 $8,667 $69, 155 $7,916 $13,829 $8,026 $6,000 $8,349 $20,120 $20,282 $22,041 $6,985 $10,659 $56,087 $450 $21,523 2019 actual $4,837 $11,202 $7,670 $3,399 $18,108 $8,549 $9,543 $7,093 $9,625 $8,667 $61,585 $7,653 $12,776 $7,764 $6,000 $8,349 $18,542 $20,282 $19,855 $6,862 $10,659 $52,200 $450 $20,942