In: Finance
The income statement for The TJX Companies, Inc., follows.
THE TJX COMPANIES, INC. Consolidated Statements of Income |
|
---|---|
Fiscal Year Ended ($ thousands) |
January 28, 2006 |
Net sales | $16,057,935 |
Cost of sales, including buying and occupancy costs | 12,295,016 |
Selling, general and administrative expenses | 2,723,960 |
Provision (credit) for computer intrusion related costs | - |
Interest expense (revenue), net | 29,632 |
Income from continuing operations before provision for income taxes | 1,009,327 |
Provision for income taxes | 318,904 |
Income from continuing operations | 690,423 |
Gain from discontinued operations, net of income taxes | - |
Net income | $ 690,423 |
Assume that the combined federal and state statutory tax rate is 38.9%.
a. Compute NOPAT using the formula: NOPAT = Net income + NNE.
Round to the nearest whole number.
b. Compute NOPAT using the formula: NOPAT = NOPBT − Tax on operating profit.
Round to the nearest whole number.
a) NOPAT = Net Income + NNE
Of the above given expenses, Interest expense is a Non Operating Expense
Net Income before provision of taxes = 690423+318904 = 1009327
Tax rate = 38.9% (given)
Net Income (after tapplying actual axes) = 1009327 (1-38.9%) = 616698.797
Net Non Operating Expense (NNE) = Non Operating Expense (1-Tax rate) = Interest Expense (1-tax rate)
= 29632 (1-38.9%) = 18105.152
NNE = 18105.152
NOPAT = Net Income + NNE = 616698.797 + 18105.152 = 634803.949
b) Of the above given expenses, Interest expense is a Non Operating Expense and hence computing Operating Profit as follows
Operating Profit = Net Sales - Cost of Sales - S,G&A = 16057935 - 12295016-2723960 = 1038959
Net sales | 1,60,57,935 |
Cost of sales, including buying and occupancy costs | 1,22,95,016 |
Selling, general and administrative expenses | 27,23,960 |
Operating Profit | 10,38,959 |
b) NOPAT = NOPBT - Tax on Operating profit = Operating Profit (1-Tax rate)
= 1038959 (1-38.9%) = 634803.95