Question
In: Accounting
1. Compute NOPAT Selected income statement information for 2018 is presented below for Home Depot Inc....
1.
Compute NOPAT
Selected income statement information for 2018 is presented below
for Home Depot Inc. and Lowe’s Companies Inc. Assume the statutory
tax rate is 22%.
| Pretax Net | Average Net | ||||||
|---|---|---|---|---|---|---|---|
| Nonoperating | Tax | Operating | |||||
| Company ($ millions) | Ticker | Sales | NOPBT | Expense | Expense | Assets | |
| Home Depot | HD | $108,203 | $16,151 | $1,013 | $3,572 | $26,226 | |
| Lowe’s | LOW | 74,161 | 4,179 | 649 | 1,080 | 20,326 |
a. Compute the following measures for both
companies.
| Measure | Rounding Instructions | Home Depot | Lowe’s | |
|---|---|---|---|---|
| 1. | Net operating profit (NOPAT) | Round to nearest whole dollar | ||
| 2. | Return on net operating assets (RNOA) | Round percentage to one decimal place | ||
| 3. | Net operating profit margin (NOPM) | Round percentage to one decimal place | ||
| 4. | Net operating asset turnover (NOAT) | Round amount to two decimal places |
b. Indicate which of these two companies:
| 1. | Is more profitable (in $s). | Home DepotLowe's | |
| 2. | Produces the higher profit margin (in %). | Home DepotLowe's | |
| 3. | Uses its NOA more efficiently. | Home DepotLowe's | |
| 4. | Produces the higher return on NOA. | Home DepotLowe's |
2.
Compute RNOA, Net Operating Profit Margin, and NOA
Turnover for Competitors
Selected balance sheet and income statement information for the
fiscal year ended February 2, 2019, for Abercrombie & Fitch Co.
and TJX Companies Inc., clothing retailers in the high‑end and
value‑priced segments, respectively, follows.
| Current | Prior | |||||
|---|---|---|---|---|---|---|
| Year Net | Year Net | |||||
| Operating | Operating | |||||
| Company ($ millions) | Ticker | Sales | NOPAT | Assets | Assets | |
| Abercrombie & Fitch | ANF | $3,590.10 | $86.53 | $784.38 | $877.30 | |
| TJX Companies | TJX | 38,583.17 | 3,036.03 | 4,252.00 | 4,073.16 |
Compute the following ratios for both companies for the fiscal
year ended February 2, 2019.
Note: For RNOA and NOPM, round percentage to one decimal places
(for example, enter 6.7% for 6.6555%).
Note: For NOAT, round amount to two decimal places (for example,
enter 6.78 for 6.77555).
| ANF | TJX | ||
|---|---|---|---|
| a. | Return on net operating assets (RNOA) | ||
| b. | Net operating profit margin (NOPM) | ||
| c. | Net operating asset turnover (NOAT) |
Solutions
Expert Solution
Note. Return on net operating assets is calculated on Net income after considering non opertaing expenss. Sometimes it may be calculated without considering non operating expense.
ekkarill92 answered 1 year agoRelated Solutions
Compute NOPAT Selected income statement information for 2018 is presented below for Home Depot Inc. and...
Compute NOPAT Selected income statement information for 2018 is
presented below for Home Depot Inc. and Lowe’s Companies Inc.
Assume the statutory tax rate is 22%. Pretax Net Average Net
Nonoperating Tax Operating Company ($ millions) Ticker Sales NOPBT
Expense Expense Assets Home Depot HD $108,203 $15,219 $955 $3,366
$24,713 Lowe’s LOW 69,883 3,938 612 1,080 20,326 a. Compute the
following measures for both companies. Measure Rounding
Instructions Home Depot Lowe’s 1. Net operating profit (NOPAT)
Round to nearest whole...
Compute ROE and RNOA with Disaggregation Selected balance sheet and income statement information for Home Depot...
Compute ROE and RNOA with Disaggregation
Selected balance sheet and income statement information for Home
Depot follows.
$ millions
Jan. 31, 2016
Feb. 01, 2015
Operating assets
$40,583
$38,473
Nonoperating assets
2,241
1,748
Total assets
42,824
40,221
Operating liabilities
15,018
13,527
Nonoperating liabilities
21,285
17,167
Total liabilities
36,303
30,694
Total stockholders' equity
6,521
9,527
Sales
88,999
Net operating profit before tax (NOPBT)
12,024
Nonoperting expense before tax
778
Tax expense
4,088
Net income
7,158
Round answers to two decimal places...
Compute ROE and RNOA with Disaggregation Selected balance sheet and income statement information for Home Depot...
Compute ROE
and RNOA with Disaggregation
Selected balance sheet and income statement information for Home
Depot follows.
$ millions
Jan. 31, 2016
Feb. 01, 2015
Operating assets
$40,333
$38,223
Nonoperating assets
2,216
1,723
Total assets
42,549
39,946
Operating liabilities
14,918
13,427
Nonoperating liabilities
21,315
17,197
Total liabilities
36,233
30,624
Total stockholders' equity
6,316
9,322
Sales
88,519
Net operating profit before tax (NOPBT)
11,774
Nonoperting expense before tax
753
Tax expense
4,012
Net income
7,009
Round all answers to two decimal...
Selected information about income statement accounts for the Rogers Company, Inc. is presented below (the company's...
Selected information about income statement accounts for the
Rogers Company, Inc. is presented below (the company's fiscal year
ends on December 31):
2018
2017
Sales
$
4,400,000
$
3,500,000
Cost of goods sold
2,860,000
2,000,000
Administrative expenses
800,000
675,000
Selling expenses
360,000
312,000
Interest revenue
150,000
140,000
Interest expense
200,000
200,000
Loss on sale of assets of discontinued component
50,000
—
On July 1, 2018, the company adopted a plan to discontinue a
division that qualifies as a component of...
Apply DuPont Disaggregation of ROE Selected balance sheet and income statement information for Home Depot follows....
Apply DuPont Disaggregation of ROE
Selected balance sheet and income statement information for Home
Depot follows.
$ millions
Jan. 31, 2016
Feb. 01, 2015
Total assets
$43,179
$40,576
Total liabilities
36,413
30,804
Sales
89,599
Net income
7,013
Round answers to two decimal places (ex: 0.12345 =
12.35%)
a. Compute ROE and disaggregate the ratio into its DuPont
components of ROA and financial leverage.
ROE: Answer
%
ROA: Answer
%
Financial leverage: Answer
b. Disaggregate ROA in to profitability and productivity...
Identify and Compute NOPAT Following is the income statement for Lowe’s Companies Inc. LOWE’S COMPANIES INC....
Identify and Compute NOPAT
Following is the income statement for Lowe’s Companies Inc.
LOWE’S COMPANIES INC.
Consolidated Statement of Earnings
Twelve Months Ended (In millions)
Feb. 1, 2019
Net sales
$114,094
Cost of sales
77,442
Gross margin
36,652
Expenses
Selling, general and administrative
27,861
Depreciation and amortization
2,363
Operating income
6,428
Interest expense, net
998
Pretax earnings
5,430
Income tax provision
1,728
Net earnings
$3,702
Compute its net operating profit after tax (NOPAT) for the 12
months ended ended February...
Selected information for Muffin’s Muffins Inc. for 2018 is presented below. All amounts are pretax. The...
Selected information for Muffin’s Muffins Inc. for 2018 is
presented below. All amounts are pretax. The effective tax rate is
30%.
Loss from operations of discontinued line of
business
$ 420,000
Inventory
3,185,000
Administrative
expenses
479,000
Retained earnings, beg
balance
2,749,600
Interest
expense
101,600
Accounts receivable,
net
573,200
Unrealized holding loss on available-for-sales
securities
118,800
Dividends declared and
paid
241,750
Cumulative decrease in income for change in depreciation method
...
Selected information about income statement accounts for the Reed Company is presented below (the company's fiscal...
Selected information about income statement accounts for the
Reed Company is presented below (the company's fiscal year ends on
December 31):
2021
2020
Sales revenue
$
4,600,000
$
3,700,000
Cost of goods sold
2,900,000
2,040,000
Administrative expense
840,000
715,000
Selling expense
400,000
342,000
Interest revenue
154,000
144,000
Interest expense
208,000
208,000
Loss on sale of assets of discontinued component
64,000
—
On July 1, 2021, the company adopted a plan to discontinue a
division that qualifies as a component of...
6. Selected information about income statement accounts for the Reed Company is presented below (the company's...
6.
Selected information about income statement accounts for the
Reed Company is presented below (the company's fiscal year ends on
December 31):
2021
2020
Sales revenue
$
5,300,000
$
4,400,000
Cost of goods sold
3,040,000
2,180,000
Administrative expense
980,000
855,000
Selling expense
540,000
482,000
Interest revenue
168,000
158,000
Interest expense
236,000
236,000
Loss on sale of assets of discontinued component
120,000
—
On July 1, 2021, the company adopted a plan to discontinue a
division that qualifies as a component...
Selected information about income statement accounts for the Reed Company is presented below (the company's fiscal...
Selected information about income statement accounts for the
Reed Company is presented below (the company's fiscal year ends on
December 31):
2018
2017
Sales
$
5,050,000
$
4,150,000
Cost of goods sold
2,990,000
2,130,000
Administrative expenses
930,000
805,000
Selling expenses
490,000
442,000
Interest revenue
163,000
153,000
Interest expense
226,000
226,000
Loss on sale of assets of
discontinued component
102,000
—
On July 1, 2018, the company adopted a plan to discontinue a
division that qualifies as a component of an...
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