Question

Compute RNOA, Net Operating Profit Margin, and NOA Turnover for Competitors
Selected balance sheet and income statement information for the fiscal year ended February 2, 2019, for Abercrombie & Fitch Co. and TJX Companies Inc., clothing retailers in the high‑end and value‑priced segments, respectively, follows.

					Current	Prior
					Year Net	Year Net
					Operating	Operating
Company ($ millions)		Ticker	Sales	NOPAT	Assets	Assets
Abercrombie & Fitch		ANF	$3,590.10	$89.15	$808.15	$877.30
TJX Companies		TJX	39,752.36	3,128.03	4,252.00	4,196.59

Compute the following ratios for both companies for the fiscal year ended February 2, 2019.
Note: For RNOA and NOPM, round percentage to one decimal places (for example, enter 6.7% for 6.6555%).
Note: For NOAT, round amount to two decimal places (for example, enter 6.78 for 6.77555).

		ANF	TJX
a.	Return on net operating assets (RNOA)	....%	.....%
b.	Net operating profit margin (NOPM)	......%	......%
c.	Net operating asset turnover (NOAT)	.......%	........%

Answer 1

	ANF	TJX
a. Return on net operating assets (RNOA)	10.6%	74%
b. Net operating profit margin (NOPM)	2.5%	7.9%
c. Net operating asset turnover (NOAT)	4.26	9.41

Explanations:

Average net operating assets = (Current year net operating asset + Prior year net operating asset) / 2

For ANF ($ in millions) = ($808.15 + $877.30) / 2

= $1,685.45 / 2 = $842.725

For TJX ($ in millions) = ($4,252 + $4,196.59) / 2

= $8,448.59 / 2 = $4,224.295

a. Return on net operating assets = NOPAT / Average net operating assets

For ANF ($ in millions) = $89.15 / $842.725 = 0.106 or 10.6%

For TJX ($ in millions) = $3,128.03 / $4,224.295 = 0.74 or 74%

b. Net operating profit margin = NOPAT / Sales

For ANF ($ in millions) = $89.15 / $3,590.10 = 0.025 or 2.5%

For TJX ($ in millions) = $3,128.03 / $39,752.36 = 0.079 or 7.9%

c. Net operating assets turnover = Sales / Average net operating assets

For ANF ($ in millions) = $3,590.10 / $842.725 = 4.26

For TJX ($ in millions) = $39,752.36 / $4,224.295 = 9.41