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NOPA 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%. Company ($ millions) Ticker Sales NOPBT Home Depot HD $108,203 $15,530 Lowe's LOW 71,309 4,018 a. Compute the following measures for both companies. 1. NOPAT Company Home Depot $ Lowe's $ Home Depot $ Lowe's $ NOPAT NOPAT Home Depot $ Lowe's $ 2. RNOA Note: 1. Select the appropriate numerator and denominator used to compute RNOA from the drop-down menu options. 2. Enter the numerator and denominator amounts to compute RNOA. Numerator Company Denominator RNOA Tax on operating profit 0x 0 x Pretax Net Nonoperating Tax Expense Expense $974 $3,435 624 1,080 Net income Home Depot $ Lowe's $ Average NOA 0 x $ 0 x $ 3. NOPM Note: 1. Select the appropriate numerator and denominator used to compute NOPM from the drop-down menu options. 2. Enter the numerator and denominator amounts to compute NOPM. NOPM Company Numerator Denominator + Net income 0x$ 0x$ + Average NOA 108,203✓ $ 0x $ + ✓ 0 x 20,326 ✓ b. Indicate which of these two companies: Indicate which of these two companies: 1. Is more profitable (in $s). 2. Produces the higher profit margin (in %). Home Depot 3. Uses its NOA more efficiently. Home Depot 1. Produces the higher return on NOA Home Depot Company Home Depot 4. NOAT Note: 1. Select the appropriate numerator and denominator used to compute NOAT from the drop-down menu options. 2. Enter the numerator and denominator amounts to compute NOAT. Company Numerator Denominator NOAT ÷ + Average Net Operating Assets + x 108,203 ✔ 0x $25,217 20,326 ÷ dx 20,326 ✔ % 0% 0% %6 0

NOPA 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%. Company ($ millions) Ticker Sales NOPBT Home Depot HD $108,203 $15,530 Lowe's LOW 71,309 4,018 a. Compute the following measures for both companies. 1. NOPAT Company Home Depot $ Lowe's $ Home Depot $ Lowe's $ NOPAT NOPAT Home Depot $ Lowe's $ 2. RNOA Note: 1. Select the appropriate numerator and denominator used to compute RNOA from the drop-down menu options. 2. Enter the numerator and denominator amounts to compute RNOA. Numerator Company Denominator RNOA Tax on operating profit 0x 0 x Pretax Net Nonoperating Tax Expense Expense $974 $3,435 624 1,080 Net income Home Depot $ Lowe's $ Average NOA 0 x $ 0 x $ 3. NOPM Note: 1. Select the appropriate numerator and denominator used to compute NOPM from the drop-down menu options. 2. Enter the numerator and denominator amounts to compute NOPM. NOPM Company Numerator Denominator + Net income 0x$ 0x$ + Average NOA 108,203✓ $ 0x $ + ✓ 0 x 20,326 ✓ b. Indicate which of these two companies: Indicate which of these two companies: 1. Is more profitable (in $s). 2. Produces the higher profit margin (in %). Home Depot 3. Uses its NOA more efficiently. Home Depot 1. Produces the higher return on NOA Home Depot Company Home Depot 4. NOAT Note: 1. Select the appropriate numerator and denominator used to compute NOAT from the drop-down menu options. 2. Enter the numerator and denominator amounts to compute NOAT. Company Numerator Denominator NOAT ÷ + Average Net Operating Assets + x 108,203 ✔ 0x $25,217 20,326 ÷ dx 20,326 ✔ % 0% 0% %6 0

Cornerstones of Financial Accounting
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter12: Fainancial Statement Analysis
Section: Chapter Questions
Problem 74E
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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%. Company ($ millions) Ticker Sales NOPBT HD $108,203 $15,530 Home Depot Lowe's LOW 71,309 4,018 a. Compute the following measures for both companies. 1. NOPAT Company Home Depot $ Lowe's $ Home Depot $ Lowe's $ 3. NOPM NOPAT 2. RNOA Note: 1. Select the appropriate numerator and denominator used to compute RNOA from the drop-down menu options. 2. Enter the numerator and denominator amounts to compute RNOA. Company Denominator RNOA Numerator Tax on operating profit 4. NOAT NOPAT Home Depot $ Lowe's $ 0 x 0 x Pretax Net Nonoperating Tax Expense Expense $974 $3,435 624 1,080 Home Depot $ Lowe's $ Numerator Net income ♦ Average NOA 0 x $ 0 x $ Note: 1. Select the appropriate numerator and denominator used to compute NOPM from the drop-down menu options. 2. Enter the numerator and denominator amounts to compute NOPM. Company Denominator NOPM ◆ Net income 0 x $ 0 x $ ◆ 0 x 20,326 ✔ ◆ Average NOA 108,203 $ 0 x $ b. Indicate which of these two companies: Indicate which of these two companies: 1. Is more profitable (in $s). Company Home Depot → ◆ 2. Produces the higher profit margin (in %). Home Depot 3. Uses its NOA more efficiently. Home Depot → 4. Produces the higher return on NOA. Home Depot ◆ 108,203 ✔ 0 x Average Net Operating Assets X Note: 1. Select the appropriate numerator and denominator used to compute NOAT from the drop-down menu options. 2. Enter the numerator and denominator amounts to compute NOAT. Company Numerator Denominator NOAT $25,217 20,326 ◆ ✓ 20,326 ✔ % 0% 0% % 0
Transcribed Image Text:Compute NOPAT Selected income statement information for 2018 is presented below for Home Depot Inc. and Lowe's Companies Inc. Assume the statutory tax rate is 22%. Company ($ millions) Ticker Sales NOPBT HD $108,203 $15,530 Home Depot Lowe's LOW 71,309 4,018 a. Compute the following measures for both companies. 1. NOPAT Company Home Depot $ Lowe's $ Home Depot $ Lowe's $ 3. NOPM NOPAT 2. RNOA Note: 1. Select the appropriate numerator and denominator used to compute RNOA from the drop-down menu options. 2. Enter the numerator and denominator amounts to compute RNOA. Company Denominator RNOA Numerator Tax on operating profit 4. NOAT NOPAT Home Depot $ Lowe's $ 0 x 0 x Pretax Net Nonoperating Tax Expense Expense $974 $3,435 624 1,080 Home Depot $ Lowe's $ Numerator Net income ♦ Average NOA 0 x $ 0 x $ Note: 1. Select the appropriate numerator and denominator used to compute NOPM from the drop-down menu options. 2. Enter the numerator and denominator amounts to compute NOPM. Company Denominator NOPM ◆ Net income 0 x $ 0 x $ ◆ 0 x 20,326 ✔ ◆ Average NOA 108,203 $ 0 x $ b. Indicate which of these two companies: Indicate which of these two companies: 1. Is more profitable (in $s). Company Home Depot → ◆ 2. Produces the higher profit margin (in %). Home Depot 3. Uses its NOA more efficiently. Home Depot → 4. Produces the higher return on NOA. Home Depot ◆ 108,203 ✔ 0 x Average Net Operating Assets X Note: 1. Select the appropriate numerator and denominator used to compute NOAT from the drop-down menu options. 2. Enter the numerator and denominator amounts to compute NOAT. Company Numerator Denominator NOAT $25,217 20,326 ◆ ✓ 20,326 ✔ % 0% 0% % 0
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