FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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c. Which profitability measures (from part a or part b) better reflect the company's profit levels during the two years?
Of the three measures, which one is least influenced by the company's stock repurchase activity?
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Transcribed Image Text:c. Which profitability measures (from part a or part b) better reflect the company's profit levels during the two years? Of the three measures, which one is least influenced by the company's stock repurchase activity? → Check
Compute and Interpret Ratios
Selected balance sheet and income statement information from Illinois Tool Works follows.
$ millions
Net operating profit after tax (NOPAT) $2,897 $3,009
Net income
2,798 2,845
Total assets
15,671 15,465 $17,451
3,147 3,384 3,384
10,493
9,224 9,840
21,070 19,475
17,274
Equity
Net operating profit after tax (NOA)
Treasury stock
a. Compute profitability measures: RNOA, ROA and ROE for 2019 and 2018 using the numbers as reported by the company.
Note: Round answers to one decimal place (ex: 0.2345 = 23.5%).
2018
Metric
RNOA
ROA
ROE
2019
$ millions
Assets, restated $
Equity, restated
Metric
RNOA
b. Adjust equity and total assets for the amount of treasury stock.
2019
2018
2017
ROA
ROE
%
%
%
2019
%
%
%
$
$
Using these restated numbers, recompute RNOA, ROA and ROE for both years.
Note: Round answers to one decimal place (ex: 0.2345 = 23.5%).
2018
%
%
%
2019 2018 2017
%
%
%
$
$
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Transcribed Image Text:Compute and Interpret Ratios Selected balance sheet and income statement information from Illinois Tool Works follows. $ millions Net operating profit after tax (NOPAT) $2,897 $3,009 Net income 2,798 2,845 Total assets 15,671 15,465 $17,451 3,147 3,384 3,384 10,493 9,224 9,840 21,070 19,475 17,274 Equity Net operating profit after tax (NOA) Treasury stock a. Compute profitability measures: RNOA, ROA and ROE for 2019 and 2018 using the numbers as reported by the company. Note: Round answers to one decimal place (ex: 0.2345 = 23.5%). 2018 Metric RNOA ROA ROE 2019 $ millions Assets, restated $ Equity, restated Metric RNOA b. Adjust equity and total assets for the amount of treasury stock. 2019 2018 2017 ROA ROE % % % 2019 % % % $ $ Using these restated numbers, recompute RNOA, ROA and ROE for both years. Note: Round answers to one decimal place (ex: 0.2345 = 23.5%). 2018 % % % 2019 2018 2017 % % % $ $
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