Question

Following are financial statement numbers and ratios for Salsa Incorporated for the year ended December 31, Year 1 (in millions). NOPAT $572.7 NOA $3,460.8 Net operating profit margin (NOPM) 15.9% Net operating asset turnover (NOAT) 1.04 If we expected revenue growth of 7% in the next year, what would projected revenue be for the year ended December 31, Year 2

Answer 1

Answer:

$3,854 million

Explanation:

Revenue in year 1 = NOPAT / NOPM

Revenue in year 1 = $572.7 / 15.9%

Revenue in year 1 = $572.7 / 0.159

Revenue in year 1 = $3,601.8868

Projected revenue in year 2 = Revenue in year 1 * (1 + Growth rate)

Projected revenue in year 2 = $3,601.8868 * (1 + 7%)

Projected revenue in year 2 = $3,601.8868 * 1.07

Projected revenue in year 2 = $3854.018876

Projected revenue in year 2 = $3,854

So, the  projected revenue for the year ended December 31, Year 2 is $3,854 million.