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Compute Costco's financial leverage (FLEV), Spread, and noncontrolling interest (NCI) ratio for 2016; recall, NNE =...

Compute Costco's financial leverage (FLEV), Spread, and noncontrolling interest (NCI) ratio for 2016; recall, NNE = NOPAT-Net income. Remember to use negative signs with answers, when appropriate.

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 78 65 63
Operating Income 3,672 3,624 3,220
Other income (expense)
Interest expense (133) (124) (113)
Interest income and other, net 80 104 90
Income before income taxes 3,619 3,604 3,197
Provision for income taxes 1,243 1,195 1,109
Net income including noncontrolling interests 2,376 2,409 2,088
Net income attributable to noncontrolling interests (26) (32) (30)
Net income attributable to Costco $2,350 $2,377 $2,058
Costco Wholesale Corporation
Consolidated Balance Sheets
($ millions, except par value and share data) August 28, 2016 August 30, 2015
Assets
Current assets
Cash and cash equivalents $3,379 $4,801
Short-term investments 1,350 1,618
Receivables, net 1,252 1,224
Merchandise inventories 8,969 8,908
Deferred income taxes and other current assets 268 228
Total current assets 15,218 16,779
Property and equipment
Land 5,395 4,961
Buildings and improvements 13,994 12,618
Equipment and fixtures 6,077 5,274
Construction in progress 701 811
Gross property and equipment 26,167 23,664
Less accumulated depreciation and amortization (9,124) (8,263)
Net property and equipment 17,043 15,401
Other assets 902 837
Total assets $33,163 $33,017
Liabilities and equity
Current liabilities
Accounts payable $7,612 $9,011
Current portion long-term debt $1,100 $1,283
Accrued salaries and benefits 2,629 2,468
Accrued member rewards 869 813
Deferred membership fees 1,362 1,269
Other current liabilities 2,003 1,695
Total current liabilities 15,575 16,539
Long-term debt, excluding current portion 4,061 4,852
Other liabilities 1,195 783
Total liabilities 20,831 22,174
Equity
Preferred stock, $0.005 par value:
100,000,000 shares authorized; no shares issued and outstanding 0 0
Common stock, $0.005 par value:
900,000,000 shares authorized;
437,524,000 and 437,952,000 shares issued and outstanding 2 2
Additional paid-in-capital 5,490 5,218
Accumulated other comprehensive loss (1,099) (1,121)
Retained earnings 7,686 6,518
Total Costco stockholders’ equity 12,079 10,617
Noncontrolling interests 253 226
Total equity 12,332 10,843
Total liabilities and equity $33,163 $33,017


(a) Compute Costco's financial leverage (FLEV), Spread, and noncontrolling interest (NCI) ratio for 2016; recall, NNE = NOPAT-Net income.

Remember to use negative signs with answers, when appropriate.  

2016 NNO =$Answer

million
2015 NNO =$Answer

million  


2016 NNE =$Answer

million
2016 NNEP =Answer

% Round NNEP to two decimal places.   

2016 FLEV        = Answer

  Round FLEV to four decimal places.   
2016 Spread    = Answer

% Round Spread to two decimal places.
2016 NCI ratio = Answer

Round NCI ratio to four decimal places.



(b) Assume that Costco's return on equity (ROE) for 2016 is 20.71% and its return on net operating assets (RNOA) is 20.66%. Confirm computations to yield the relation: ROE = [RNOA + (FLEV X Spread)] X NCI ratio.

2016 ROE =Answer

% = [Answer

%+(Answer

X Answer

%)] X Answer


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