In: Accounting
Income statements and balance sheets follow for The New York Times Company. Refer to these financial statements to answer the requirements.
The New York Times Company Consolidated Statements of Income |
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Fiscal year ended |
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(in thousands) |
Dec. 29, 2016 |
Dec. 30, 2015 |
Revenues |
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Circulation |
$ 880,543 |
$ 851,790 |
Advertising |
580,732 |
638,709 |
Other |
94,067 |
88,716 |
Total revenues |
1,555,342 |
1,579,215 |
Production costs |
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Wages and benefits |
363,051 |
354,516 |
Raw materials |
72,325 |
77,176 |
Other |
192,728 |
186,120 |
Total production costs |
628,104 |
617,812 |
Selling, general and administrative costs |
721,083 |
713,837 |
Depreciation and amortization |
61,723 |
61,597 |
Total operating costs |
1,410,910 |
1,393,246 |
Restructuring charge |
14,804 |
0 |
Multiemployer pension plan withdrawal expense |
6,730 |
9,055 |
Pension settlement charges |
21,294 |
40,329 |
Early termination charge |
0 |
0 |
Operating profit |
101,604 |
136,585 |
Loss from joint ventures |
(36,273) |
(783) |
Interest expense, net |
34,805 |
39,050 |
Income from continuing operations before income taxes |
30,526 |
96,752 |
Income tax expense/(benefit) |
4,421 |
33,910 |
Income from continuing operations |
26,105 |
62,842 |
Loss from discontinued operations, net of income taxes |
(2,273) |
0 |
Net income |
23,832 |
62,842 |
Net loss attributable to the noncontrolling interest |
5,236 |
404 |
Net income attributable to The New York Times Company common stockholders |
$29,068 |
$63,246 |
Continued next page
The New York Times Company Consolidated Balance Sheets |
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As of |
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(in thousands) |
Dec. 29, 2016 |
Dec. 30, 2015 |
Cash and cash equivalents |
$ 100,692 |
$ 105,776 |
Short-term investments |
449,535 |
507,639 |
Accounts receivable, net |
197,355 |
207,180 |
Prepaid assets |
15,948 |
19,430 |
Other current assets |
32,648 |
22,507 |
Total current assets |
796,178 |
862,532 |
Long-term marketable securities |
187,299 |
291,136 |
Investments in joint ventures |
15,614 |
22,815 |
Property plant and equipment, net |
596,743 |
632,439 |
Goodwill |
134,517 |
109,085 |
Deferred income taxes |
301,342 |
309,142 |
Miscellaneous assets |
153,702 |
190,541 |
Total assets |
$2,185,395 |
$2,417,690 |
Accounts payable |
$ 104,463 |
$ 96,082 |
Accrued payroll and other related liabilities |
96,463 |
98,256 |
Unexpired subscriptions |
66,686 |
60,184 |
Current portion of long-term debt |
0 |
188,377 |
Accrued expenses and other |
131,125 |
120,686 |
Total current liabilities |
398,737 |
563,585 |
Long-term debt and capital lease obligations |
246,978 |
242,851 |
Pension benefits obligation |
558,790 |
627,697 |
Postretirement benefits obligation |
57,999 |
62,879 |
Other |
78,647 |
92,223 |
Total other liabilities |
942,414 |
1,025,650 |
Stockholders’ equity |
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Common stock of $0.10 par value |
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Class A common stock |
16,921 |
16,826 |
Class B convertible stock |
82 |
82 |
Additional paid-in capital |
149,928 |
146,348 |
Retained earnings |
1,331,911 |
1,328,744 |
Common stock held in treasury, at cost |
(171,211) |
(156,155) |
Accumulated other comprehensive loss, net of tax |
(479,816) |
(509,094) |
Total New York Times Company stockholders’ equity |
847,815 |
826,751 |
Noncontrolling interest |
(3,571) |
1,704 |
Total stockholders’ equity |
844,244 |
828,455 |
Total liabilities and stockholders’ equity |
$2,185,395 |
$2,417,690 |
Continued next page
Required:
a. Compute net operating profit after tax (NOPAT) for 2016 and 2015. Compute net operating assets (NOA) for 2016 and 2015. Assume that combined federal and state statutory. Compute return on net operating assets (RNOA) for 2016 and 2015. Net operating assets are $397,299 thousand in 2014.
b. Compute return on common shareholders equity (ROE) for 2016 and 2015. Stockholders’ equity attributable to New York Times Company in 2014 is $726,328 thousand.
c. What is nonoperating return component of ROE for 2016 and 2015?
d. Comment on the difference between ROE and RNOA. What inference do you draw from this comparison?
Please Show Work - Excel or Word Answer is Prefered.
2016 |
2015 |
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EBIT |
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Tax Rate |
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Taxes |
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Net Operating Profit After Tax |
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Net Operating Asset Calculations |
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2016 |
2015 |
2014 |
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Operating Assets Total Assets (Cash + Short Term Inv. + Marketable Securities) |
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Operating Liabilities Total Liabilities (Short Term + Long Term Notes) |
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NOA |
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Equity |
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Net Income |
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Return on NOA |
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ROE |
Working note :-
1) Calculation of operating profit or EBIT
particulars. 2016 . 2015
Total revenue . 1555,342 . 1579,215
Operating cost . 1410,910 . 1393,246
Operating profit or EBIT. 144,432 . 185,969
2) .calculatcalculation of net operating assets
Operating asset . 2016 . 2015
Cash . 100,692. 105,776
Short term investment . 449535. 507639
Long term marketable sec . 187299 . 291136
(-) current position of long term liability 0 . 188377
Debt . 246978 . 242851
Net operating asset . 490548. 473323
3) calculation of effective tax rate
Particulars . 2016 . 2015
Tax exp. 4421. 33910
÷ Net income . 30526. 96752
Tax rate . 14.48% . 35.05%
(A)
Particulars | 2016 | 2015 | |
EBIT | 144432 | 185969 | |
Tax rate | 14.48% | 35.05% | |
Tax | 20914 | 65182 | |
NOPAT | 123518 | 120787 |
B)
Particulars | 2016 | 2015 | 2014 |
Operating asset(cash+marketable sec.+short term
invt. |
737526 | 904551 | |
Operating liab.(short term and long term notes) | 246978 | 431228 | |
Net operating asset .(b) | 490548 | 473323 | 397299 |
Equity .(c) | 844244 | 828455 | 726328 |
Net income. (a) | 23832 | 62842 | |
Return on NOA .(a)÷(b) | 4.86% | 13.28% | |
ROE .(a)÷(c) | 2.82% | 7.59% |
Comment : Dur to increased loss from joint venture in 2016 compared from 2015 ROE & RNOA Is more in 2015.