Analysis and Interpretation of Profitability Balance sheets and income statements for Target Corporation follow. Income Statement...

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Analysis and Interpretation of Profitability Balance sheets and income statements for Target Corporation follow. Income State

4,934 16,110 3,553 2,188 1,596 (6,950) 21,431 1,212 $ 37,349 4,449 14,174 3,219 2,214 1,158 (6,176) 19,038 1,552 $ 34,995 Lan

(e) Compute return on equity (ROE) for 2007. (Round your answers to two decimal places. Do not round until your final answer.

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Answer 1

Answer #1

1	ROE =	Net Income/Average shareholder's equity
		2,787 / 25,314
		11.01%

	Average shareholder's equity =	(15,633 + 34,995) / 2
		25,314

2	Nonoperating return =	ROE – RNOA


	ROE = Operating Return + Nonoperating Return

	RNOA =	NOPAT/Average NOA

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Answer 2

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