Question

Consolidated Statements of Earnings
For Fiscal Years Ended ($ millions)	February 27, 2018	February 28, 2017	March 1, 2016
Revenue	$ 49,694	$ 45,015	$ 40,023
Cost of goods sold	37,534	34,017	30,477
Restructuring charges - cost of goods sold	--	--	--
Gross Profit	12,160	10,998	9,546
Selling, general and administrative expenses	9,873	8,984	7,385
Restructuring charges	52	78	--
Goodwill and tradename impairment	--	66	--
Operating income	2,235	1,870	2,161
Other income (expense)
Investment income and other	54	35	129
Investment impairment	--	(111)	--
Interest expense	(94)	(94)	(62)
Earnings before income tax expense and equity in income of affiliates	2,195	1,700	2,228
Income tax expense	801	667	818
Net Income	1,394	1,033	1,410

Question Calculate the NOPAT of 2016 and 2017 (Assume the tax rate is 20%)

Answer 1

Solution:

NOPAT (2016) = NOPBT - Tax on Operating Profit.

Tax Shield = Pretax net operating expenses Statutory tax rate = $62 20% = $12.40

Operating taxes + Non - Operating taxes = Total taxes

Operating taxes - $12.40 = $818

Operating taxes = $818 + $12.40 = $830.40

NOPAT = NOPBT - Tax on Operating Profit. = $2,228 - $830.40 = $1,397.6

NOPAT = $1,397.6

NOPAT (2017) = NOPBT - Tax on Operating Profit.

Tax Shield = Pretax net operating expenses Statutory tax rate = $94 20% = $18.80

Operating taxes + Non - Operating taxes = Total taxes

Operating taxes - $18.80 = $ 667

Operating taxes = $ 667 + $18.80 = $685.80

NOPAT = NOPBT - Tax on Operating Profit. = $1,700 - $685.80 = $1,014.20

NOPAT = $1,014.20