Compute ROE and RNOA with Disaggregation Selected balance sheet and income state

Question

Compute ROE and RNOA with Disaggregation Selected balance sheet and income statement information for H $ millions Operating assets Nonoperating assets Total assets Jan. 31, 2016 Feb. 01, 2015 $40,583 $38,A73 1,748 40,221 2,241 42,824 15,018 21,285 36,303 Operating liabilities Nonoperating liabilities Total liabilities 13,527 17,167 30,694 9,527 Toial stockholders' equity 6,521 Sales Net operating profit before tax (NOPBT) Nonoperting expense before tax Tax expense Net income 88,999 12,024 778 4,088 7.158 12.35%) Round answers to two-decimal places (ex: 0.1 2345 a. Compute return on equity 89.21 b. Compute return on net operating assets (RNOA) 29.8 x % c. Use ROE and RNOA to determine the nonoperating return to C %

Explanation / Answer

RNOA

Return on Net Operating Assets = Net Income / Average Net Operating Assets

Average Net Operating Assets=(40583-15018+38473-13527)/2=25255.50

=7158/25255.50

=28.34%

c

Non Operating Return =ROE-RONA =89.21%-28.34%=60.87%

=7158/((40583+38473)/2)

=18.11%

c

Non Operating Return =ROE -RNOA=89.21%-18.11% =71.10%

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