Using the Campbell Soup files given below, develop NOPAT, OCF, and FCF for the last two years. In your opinion and using these measures, is the firm healthy or not? Why or why not? [Note: you will need to use the cash flow statement to find data for fixed asset and working capital investments. For fixed asset investment, consider only the “Purchases of plant assets” in your analysis from the cash flow statement. For working capital investment, only consider Depreciation and Amortization, accounts receivable, inventory, accounts payable, accruals from the cash flow statement. Remember that each of these cash flows already represent changes in cash flow period-over-period.] Please use supporting data exhibits.

Consolidated Balance Sheets

July 28,
2019 July 29,
2018

Current assets

Cash and cash equivalents $            31 $            49

Accounts receivable, net 574 563

Inventories 863 887

Other current assets 71 71

Current assets of discontinued operations 428 726

Total current assets 1,967 2,296

Plant assets, net of depreciation 2,455 2,466

Goodwill 4,017 3,864

Other intangible assets, net of amortization 3,415 3,664

Other assets ($76 as of 2019 and $77 as of 2018 attributable to variable interest entity) 127 189

Noncurrent assets of discontinued operations 1,167 2,050

Total assets $ 13,148 $ 14,529

Current liabilities

Short-term borrowings $     1,371 $     1,525

Payable to suppliers and others 814 705

Accrued liabilities 609 516

Dividends payable 107 107

Accrued income taxes 15 10

Current liabilities of discontinued operations 469 731

Total current liabilities 3,385 3,594

Long-term debt 7,103 7,991

Deferred taxes 924 960

Other liabilities 559 547

Noncurrent liabilities of discontinued operations 65 64

Total liabilities 12,036 13,156

Commitments and contingencies

Campbell Soup Company shareholders' equity

Preferred stock; authorized 40 shares; none issued — —

Capital stock, $.0375 par value; authorized 560 shares; issued 323 shares 12 12

Additional paid-in capital 372 349

Earnings retained in the business 1,993 2,224

Capital stock in treasury, at cost (1,076) (1,103)

Accumulated other comprehensive loss (198) (118)

Total Campbell Soup Company shareholders' equity 1,103 1,364

Noncontrolling interests 9 9

Total equity 1,112 1,373

Total liabilities and equity $ 13,148 $ 14,529

Consolidated Statements of Earnings

2019 2018 2017

Net sales $     8,107 $     6,615 $     5,837

Costs and expenses

Cost of products sold 5,414 4,241 3,395

Marketing and selling expenses 842 728 675

Administrative expenses 610 563 448

Research and development expenses 91 91 93

Other expenses / (income) 140 (73) (216)

Restructuring charges 31 55 11

Total costs and expenses 7,128 5,605 4,406

Earnings before interest and taxes 979 1,010 1,431

Interest expense 356 183 115

Interest income 2 3 —

Earnings before taxes 625 830 1,316

Taxes on earnings 151 106 392

Earnings from continuing operations 474 724 924

Loss from discontinued operations (263) (463) (37)

Net earnings 211 261 887

Less: Net earnings (loss) attributable to noncontrolling interests — — —

Net earnings attributable to Campbell Soup Company $         211 $         261 $         887

Per Share — Basic

Earnings from continuing operations attributable to Campbell Soup Company $        1.57 $        2.41 $        3.03

Loss from discontinued operations (0.87) (1.54) (0.12)

Net earnings attributable to Campbell Soup Company $        0.70 $        0.87 $        2.91

Weighted average shares outstanding — basic 301 301 305

Per Share — Assuming Dilution

Earnings from continuing operations attributable to Campbell Soup Company $        1.57 $        2.40 $        3.01

Loss from discontinued operations (0.87) (1.53) (0.12)

Net earnings attributable to Campbell Soup Company(1) $        0.70 $        0.86 $        2.89

Weighted average shares outstanding — assuming dilution 302 302 307

Question

Using the Campbell Soup files given below, develop NOPAT, OCF, and FCF for the last two years. In your opinion and using these measures, is the firm healthy or not? Why or why not? [Note: you will need to use the cash flow statement to find data for fixed asset and working capital investments. For fixed asset investment, consider only the “Purchases of plant assets” in your analysis from the cash flow statement. For working capital investment, only consider Depreciation and Amortization, accounts receivable, inventory, accounts payable, accruals from the cash flow statement. Remember that each of these cash flows already represent changes in cash flow period-over-period.] Please use supporting data exhibits.

Consolidated Balance Sheets



	July 28, 2019	July 29, 2018
Current assets
Cash and cash equivalents	$ 31	$ 49
Accounts receivable, net	574	563
Inventories	863	887
Other current assets	71	71
Current assets of discontinued operations	428	726
Total current assets	1,967	2,296
Plant assets, net of depreciation	2,455	2,466
Goodwill	4,017	3,864
Other intangible assets, net of amortization	3,415	3,664
Other assets ($76 as of 2019 and $77 as of 2018 attributable to variable interest entity)	127	189
Noncurrent assets of discontinued operations	1,167	2,050
Total assets	$ 13,148	$ 14,529
Current liabilities
Short-term borrowings	$ 1,371	$ 1,525
Payable to suppliers and others	814	705
Accrued liabilities	609	516
Dividends payable	107	107
Accrued income taxes	15	10
Current liabilities of discontinued operations	469	731
Total current liabilities	3,385	3,594
Long-term debt	7,103	7,991
Deferred taxes	924	960
Other liabilities	559	547
Noncurrent liabilities of discontinued operations	65	64
Total liabilities	12,036	13,156
Commitments and contingencies
Campbell Soup Company shareholders' equity
Preferred stock; authorized 40 shares; none issued	—	—
Capital stock, $.0375 par value; authorized 560 shares; issued 323 shares	12	12
Additional paid-in capital	372	349
Earnings retained in the business	1,993	2,224
Capital stock in treasury, at cost	(1,076)	(1,103)
Accumulated other comprehensive loss	(198)	(118)
Total Campbell Soup Company shareholders' equity	1,103	1,364
Noncontrolling interests	9	9
Total equity	1,112	1,373
Total liabilities and equity	$ 13,148	$ 14,529

Consolidated Statements of Earnings



	2019	2018	2017
Net sales	$ 8,107	$ 6,615	$ 5,837
Costs and expenses
Cost of products sold	5,414	4,241	3,395
Marketing and selling expenses	842	728	675
Administrative expenses	610	563	448
Research and development expenses	91	91	93
Other expenses / (income)	140	(73)	(216)
Restructuring charges	31	55	11
Total costs and expenses	7,128	5,605	4,406
Earnings before interest and taxes	979	1,010	1,431
Interest expense	356	183	115
Interest income	2	3	—
Earnings before taxes	625	830	1,316
Taxes on earnings	151	106	392
Earnings from continuing operations	474	724	924
Loss from discontinued operations	(263)	(463)	(37)
Net earnings	211	261	887
Less: Net earnings (loss) attributable to noncontrolling interests	—	—	—
Net earnings attributable to Campbell Soup Company	$ 211	$ 261	$ 887
Per Share — Basic
Earnings from continuing operations attributable to Campbell Soup Company	$ 1.57	$ 2.41	$ 3.03
Loss from discontinued operations	(0.87)	(1.54)	(0.12)
Net earnings attributable to Campbell Soup Company	$ 0.70	$ 0.87	$ 2.91
Weighted average shares outstanding — basic	301	301	305
Per Share — Assuming Dilution
Earnings from continuing operations attributable to Campbell Soup Company	$ 1.57	$ 2.40	$ 3.01
Loss from discontinued operations	(0.87)	(1.53)	(0.12)
Net earnings attributable to Campbell Soup Company(1)	$ 0.70	$ 0.86	$ 2.89
Weighted average shares outstanding — assuming dilution	302	302	307

Accepted Answer

NOPAT also known as Net Operating Profit after Taxes shows the revenue generated by a firm from its…