Analysis and Interpretation of Profitability 2008 NOPAT =Â AnswerÂ ($ millions) 2008 NOA =Â AnswerÂ ($ millions)Â (c) Compute Target's RNOA, net operating profit margin (NOPM) and net operating asset turnover (NOAT) for 2008. (Do not round until final answer. Round two decimal places. Do not use NOPM x NOAT to calculate RNOA.) 2008 RNOA =Â Answer% (d) Compute net nonoperating obligations (NNO) for 2008 and 2007.Â 2008 NNO =Â AnswerÂ ($ millions)Â 2008 ROE =Â Answer% 2008 nonoperating return =Â Answer%
Balance sheets and income statements for Target Corporation follow.
Sales $ 61,471 $ 57,878 $ 51,271 Credit card revenues 1,896 1,612 1,349 Total revenues 63,367 59,490 52,620 Cost of sales 41,895 39,399 34,927 Selling, general and administrative expenses 13,704 12,819 11,185 Credit card expenses 837 707 776 Depreciation and amortization 1,659 1,496 1,409 Earnings before interest and income taxes 5,272 5,069 4,323 Net interest expense 647 572 463 Earnings before income taxes 4,625 4,497 3,860 Provisions for income taxes 1,776 1,710 1,452 Net earnings $ 2,849 $ 2,787 $ 2,408 Assets Â Â Cash and cash equivalents $ 2,450 $ 813 Credit card receivables 8,054 6,194 Inventory 6,780 6,254 Other current assets 1,622 1,445 Total current assets 18,906 14,706 Property and equipment Â Â Land 5,522 4,934 Buildings and improvements 18,329 16,110 Fixtures and equipment 3,858 3,553 Computer hardware and software 2,421 2,188 Construction-in-progress 1,852 1,596 Accumulated depreciation (7,887) (6,950) Property and equipment, net 24,095 21,431 Other noncurrent assets 1,559 1,212 Total assets $ 44,560 $ 37,349 Liabilities and shareholders' investment Â Â Accounts payable $ 6,721 $ 6,575 Accrued and other current liabilities 3,097 3,180 Current portion of long-term debt and notes payable 1,964 1,362 Total current liabilities 11,782 11,117 Long-term debt 15,126 8,675 Deferred income taxes 470 577 Other noncurrent liabilities 1,875 1,347 Shareholders' investment Â Â Common stock 68 72 Additional paid-in-capital 2,656 2,387 Retained earnings 12,761 13,417 Accumulated other comprehensive income (loss) (178) (243) Total shareholders' investment 15,307 15,633 Total liabilities and shareholders' equity $ 44,560 $ 37,349
(a) Compute net operating profit after tax (NOPAT) for 2008. Assume that the combined federal and statutory rate is: 39%. (Round your answer to the nearest whole number.)
(b) Compute net operating assets (NOA) for 2008 and 2007.
2007 NOA =Â AnswerÂ ($ millions)
2008 NOPM =Â Answer%
2008 NOAT =Â Answer
2007 NNO =Â AnswerÂ ($ millions)Â
(e) Compute return on equity (ROE) for 2008. (Round your answers to two decimal places. Do not round until your final answer.)
(f) Infer the nonoperating return component of ROE for 2008. (Use answers from above to calculate. Round your answer to two decimal places.)
(g) Which of the following statements reflects the best inference we can draw from the difference between Target's ROE and RNOA?Â
Analysis and Interpretation of Profitability
2008 NOPAT =Â AnswerÂ ($ millions)
2008 NOA =Â AnswerÂ ($ millions)Â
(c) Compute Target's RNOA, net operating profit margin (NOPM) and net operating asset turnover (NOAT) for 2008. (Do not round until final answer. Round two decimal places. Do not use NOPM x NOAT to calculate RNOA.)
2008 RNOA =Â Answer%
(d) Compute net nonoperating obligations (NNO) for 2008 and 2007.Â
2008 NNO =Â AnswerÂ ($ millions)Â
2008 ROE =Â Answer%
2008 nonoperating return =Â Answer%
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