Homework Answers
Let us first see how to calculate ROE, RNOA and FLEV
ROE = Net Income / Average Equity
RNOA = NOPAT / Average NOA
FLEV = NFO / Average Equity
ROE = RNOA + (FLEV X Spread)
RNOA is the most important driver of ROE.
If the management wants to improve the ROE, both RNOA and FLEV are drivers of ROE.
In order to increase ROE
1. Increase RNOA through better operating performance
2. Use FLEV efficiently
GREATER FLEV IS NOT ALWAYS BETTER.
If increase in FLEV results in increasing ROE, then all companies should be 100% financed by debt. But it is very very RISKY. Debt induces compulsory repayment. If delayed, the lenders can force payment. This can result in liquidation and bankruptcy.
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Explain hol return on net operating assets (RNOA) and financial leverage (FLEV) affect Return on Equity...
3 What is the difference between the traditional ROA measure (part of the traditional DuPont analysis)...
3 What is the difference between the traditional ROA measure (part of the traditional DuPont analysis) and the return on net operating assets (RNOA)? 4 Explain how return on net operating assets (RNOA) and financial leverage (FLEV) affect Return on Equity (ROE). Is greater FLEV always better? 5 Explain the trade-off between net operating profit margin and net operating asset turnover. 6 What is liquidity? Identify and discuss two ways to measure a company's liquidity. 5. What is solvency? Identify...
Which statement is TRUE? A. The two components of RNOA, net operating profit margin and NOA...
Which statement is TRUE? A. The two components of RNOA, net operating profit margin and NOA turnover, are independent of each other. B. A decrease in net operating profit margin will cause both return on net operating assets and return on equity to decrease, all other things being equal. C. If a company has rapidly growing earnings per share, their return on net operating assets must be increasing too. D. Return on net operating assets will always be greater than...
Washington2 Post 2011 balance sheet shows net operating profit margin (NOPM) of 4.2%, net operating asset...
Washington2 Post 2011 balance sheet shows net operating profit margin (NOPM) of 4.2%, net operating asset turnover (NOAT) of 1.75, return on equity of 4.3%, and adjusted return on assets of 3.4%. What is the company's nonoperating return? [E] 0 -3.1% O 3.1% O 0.1% O 0.9% O None of the above ROE is computed as:[E] O (Net income - Preferred dividends) / Average stockholders' equity Income / Net sales RNOA + (FLEV ~ Spread) A and B A and...
$ millions Operating assets Nonoperating assets Total assets Operating liabilities Nonoperating liabilities Total liabilities Total stockholders'...
$ millions Operating assets Nonoperating assets Total assets Operating liabilities Nonoperating liabilities Total liabilities Total stockholders' equity Sales Net operating profit before tax (NOPBT) Nonoperting expense before tax Tax expense Net income Jan. 31, 2016 Feb. 01, 2015 $40,333 $38,223 2,216 1,723 42,549 39,946 14,918 13,427 21,315 17,197 36,233 30,624 6,316 88,519 11,774 753 4,012 7,009 9,322 Round all answers to two decimal places (ex: 0.12345 = 12.35%) a. Compute return on equity. 89.64 % b. Compute return on net...
Compute ROE and RNOA with Disaggregation Selected balance sheet and income statement information for Home Depot...
Compute ROE and RNOA with Disaggregation
Selected balance sheet and income statement information for Home
Depot follows.
Compute ROE and RNOA with Disaggregation Selected balance sheet and income statement information for Home Depot follows. $ millions Operating assets Nonoperating assets Total assets Operating liabilities Nonoperating liabilities Total liabilities Total stockholders' equity Sales Net operating profit before tax (NOPBT) Nonoperting expense before tax Tax expense Net income Jan. 31, 2016 Feb. 01, 2015 $40,683 $38,573 2,266 1,773 42,949 40,346 15,043 13,552...
40,346 Compute ROE and RNOA with Disaggregation Selected balance sheet and income statement information for Home...
40,346 Compute ROE and RNOA with Disaggregation Selected balance sheet and income statement information for Home Depot follows. S millions Jan. 31, 2016 Feb. 01, 2015 Operating assets $40633 538.573 Nonoperating assets 2.266 1.773 Total assets 42.9.49 Operating abilities 15.043 13,552 Nonoperating liabilities 21.275 17,157 Total liabilities 36.318 30.709 Total stockholders' equity 9.637 Sales 89,234 Net operating profit before tax (NOPBT) 12.124 Nonoperting expense before tax 303 Tax expense 4,001 Net Income 7.320 6,631 Round answers to two decimal places...
I just need the questions with the red x's answered Compute RNOA with Disaggregation Selected balance...
I just need the questions with the red x's answered
Compute RNOA with Disaggregation Selected balance sheet and income statement information for Home Depot follows. $ millions Jan. 31, 2016 Feb. 01, 2015 Operating assets $40.583 $38,473 Nonoperating assets 2.241 1.748 Total assets 42.824 40.221 Operating liabilities 15.018 13.527 Nonoperating liabilities 21,285 17,167 Total liabilities 36.303 30.694 Sales 88.999 Net operating profit before tax (NOPBT) 12.024 Nonoperting expense before tax 778 Tax expense 4,088 Net income 7.158 Round answers to...
Direct Computation of Nonoperating Return Balance sheets and income statements for 3M Company follow. 3M COMPANY...
Direct Computation of Nonoperating Return Balance sheets and income statements for 3M Company follow. 3M COMPANY Consolidated Statements of Income For Years Ended December 31 ($ millions) 2018 2017 Net sales $32,765 $31,657 Operating expenses Cost of sales 16,682 16,055 Selling, general and administrative expenses 7,602 6,626 Research, development and related expenses 1,821 1,870 Gain on sale of businesses (547) (586) Total operating expenses 25,558 23,965 Operating income 7,207 7,692 Other expense, net* 207 144 Income before income taxes 7,000...
Compute ROE and RNOA with Disaggregation Selected balance sheet and income statement information for Home Depot...
Compute ROE and RNOA with Disaggregation
Selected balance sheet and income statement information for Home
Depot follows.
Please help. I have figured out part a and the NOAT of part d.
Everything else I cannot find.
Compute ROE and RNOA with Disaggregation Selected balance sheet and income statement information for Home Depot follows. $ millions Operating assets Nonoperating assets Total assets Operating liabilities Nonoperating liabilities Total liabilities Total stockholders' equity Sales Net operating profit before tax (NOPBT) Nonoperting expense before...
this is a clearer picture .. thanks Direct Computation of Nonoperating Return Balance sheets and income...
this is a clearer picture .. thanks
Direct Computation of Nonoperating Return Balance sheets and income statements for Costco Wholesale Corporation follow. Costco Wholesale Corporation Consolidated Statements of Earnings For Fiscal Years Ended ($ millions) August 28, 2016 August 30, 2015 August 31, 2014 Revenue Net Sales $116,073 $113,666 $110,212 Membership fees 2,646 2,533 2,428 Total revenue 118,719 116,199 112,640 Operating expenses Merchandise costs 102,901 101,065 98,458 Selling, general and administrative 12,068 11,445 10,899 Preopening expenses 65 63 Operating Income...
3 What is the difference between the traditional ROA measure (part of the traditional DuPont analysis) and the return on net operating assets (RNOA)? 4 Explain how return on net operating assets (RNOA) and financial leverage (FLEV) affect Return on Equity (ROE). Is greater FLEV always better? 5 Explain the trade-off between net operating profit margin and net operating asset turnover. 6 What is liquidity? Identify and discuss two ways to measure a company's liquidity. 5. What is solvency? Identify...
Washington2 Post 2011 balance sheet shows net operating profit margin (NOPM) of 4.2%, net operating asset turnover (NOAT) of 1.75, return on equity of 4.3%, and adjusted return on assets of 3.4%. What is the company's nonoperating return? [E] 0 -3.1% O 3.1% O 0.1% O 0.9% O None of the above ROE is computed as:[E] O (Net income - Preferred dividends) / Average stockholders' equity Income / Net sales RNOA + (FLEV ~ Spread) A and B A and...
$ millions Operating assets Nonoperating assets Total assets Operating liabilities Nonoperating liabilities Total liabilities Total stockholders' equity Sales Net operating profit before tax (NOPBT) Nonoperting expense before tax Tax expense Net income Jan. 31, 2016 Feb. 01, 2015 $40,333 $38,223 2,216 1,723 42,549 39,946 14,918 13,427 21,315 17,197 36,233 30,624 6,316 88,519 11,774 753 4,012 7,009 9,322 Round all answers to two decimal places (ex: 0.12345 = 12.35%) a. Compute return on equity. 89.64 % b. Compute return on net...
Compute ROE and RNOA with Disaggregation
Selected balance sheet and income statement information for Home
Depot follows.
Compute ROE and RNOA with Disaggregation Selected balance sheet and income statement information for Home Depot follows. $ millions Operating assets Nonoperating assets Total assets Operating liabilities Nonoperating liabilities Total liabilities Total stockholders' equity Sales Net operating profit before tax (NOPBT) Nonoperting expense before tax Tax expense Net income Jan. 31, 2016 Feb. 01, 2015 $40,683 $38,573 2,266 1,773 42,949 40,346 15,043 13,552...
40,346 Compute ROE and RNOA with Disaggregation Selected balance sheet and income statement information for Home Depot follows. S millions Jan. 31, 2016 Feb. 01, 2015 Operating assets $40633 538.573 Nonoperating assets 2.266 1.773 Total assets 42.9.49 Operating abilities 15.043 13,552 Nonoperating liabilities 21.275 17,157 Total liabilities 36.318 30.709 Total stockholders' equity 9.637 Sales 89,234 Net operating profit before tax (NOPBT) 12.124 Nonoperting expense before tax 303 Tax expense 4,001 Net Income 7.320 6,631 Round answers to two decimal places...
I just need the questions with the red x's answered
Compute RNOA with Disaggregation Selected balance sheet and income statement information for Home Depot follows. $ millions Jan. 31, 2016 Feb. 01, 2015 Operating assets $40.583 $38,473 Nonoperating assets 2.241 1.748 Total assets 42.824 40.221 Operating liabilities 15.018 13.527 Nonoperating liabilities 21,285 17,167 Total liabilities 36.303 30.694 Sales 88.999 Net operating profit before tax (NOPBT) 12.024 Nonoperting expense before tax 778 Tax expense 4,088 Net income 7.158 Round answers to...
Direct Computation of Nonoperating Return Balance sheets and income statements for 3M Company follow. 3M COMPANY Consolidated Statements of Income For Years Ended December 31 ($ millions) 2018 2017 Net sales $32,765 $31,657 Operating expenses Cost of sales 16,682 16,055 Selling, general and administrative expenses 7,602 6,626 Research, development and related expenses 1,821 1,870 Gain on sale of businesses (547) (586) Total operating expenses 25,558 23,965 Operating income 7,207 7,692 Other expense, net* 207 144 Income before income taxes 7,000...
Compute ROE and RNOA with Disaggregation
Selected balance sheet and income statement information for Home
Depot follows.
Please help. I have figured out part a and the NOAT of part d.
Everything else I cannot find.
Compute ROE and RNOA with Disaggregation Selected balance sheet and income statement information for Home Depot follows. $ millions Operating assets Nonoperating assets Total assets Operating liabilities Nonoperating liabilities Total liabilities Total stockholders' equity Sales Net operating profit before tax (NOPBT) Nonoperting expense before...
this is a clearer picture .. thanks
Direct Computation of Nonoperating Return Balance sheets and income statements for Costco Wholesale Corporation follow. Costco Wholesale Corporation Consolidated Statements of Earnings For Fiscal Years Ended ($ millions) August 28, 2016 August 30, 2015 August 31, 2014 Revenue Net Sales $116,073 $113,666 $110,212 Membership fees 2,646 2,533 2,428 Total revenue 118,719 116,199 112,640 Operating expenses Merchandise costs 102,901 101,065 98,458 Selling, general and administrative 12,068 11,445 10,899 Preopening expenses 65 63 Operating Income...
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