Finance Southwest Airlines Return on Asset Questions I attached my assignment below.Please send it by TODAY (July 18) at 4pm (Eastern Time Zone – USA) **Pl

Finance Southwest Airlines Return on Asset Questions I attached my assignment below.Please send it by TODAY (July 18) at 4pm (Eastern Time Zone – USA) **Please explain each question in detail, including the formula.
Question 1
Use Southwest Airlines’ 2016 financial statement information, below to answer the following:
•
•
Calculate Southwest Airlines’ return on assets (ROA) for the year ending December 31,
2016.
Disaggregate Southwest Airlines’ ROA into profit margin (PM) and asset turnover (AT).
Explain what each ratio measures.
($ millions)
Total operating revenues
$20,425
Net income
2,244
Total assets, beginning of year
21,312
Total assets, end of year
23,286
Equity, end of year
8,441
Question 2
Use the income statement for Microsoft Corporation to compute the following: MICROSOFT CORP.pdf
•
•
•
Tax shield
The tax on operating profit
NOPAT
The company’s combined federal and state statutory tax rate is 37.0%.
Question 3
Use the following balance sheets and income statements for Valero Energy Corporation to answer the
following: Valero Energy Corporation and Subsidiaries.pdf
Compute Valero’s return on equity (ROE) for 2016 and 2015. Valero Energy stockholders’ equity in 2014
was $20,677 million.
Question 4
Below are selected balance sheet and market data for three shoe companies. ($ millions)
Company
Year End
Company
Assets
Liabilitie
s
Number of
shares
outstanding (in
millions)
End of year
stock price
(per share)
Nike, Inc.
May 31,
2016
21,396
9,138
1,682
$55.22
Skechers, USA, Inc.
Dec. 31,
2016
2,394
708
155
$24.58
Caleres, Inc.
Jan. 28,
2017
1,475
861
43
$32.82
1. Calculate the market capitalization of each company.
2. Calculate the market to book ratio for each company.
3. Comment on differences you observe.
Question 5
Income statements and balance sheets follow for Snap-On Incorporated. Refer to these financial
statements to answer the following questions. Snap.pdf
1. Compute net operating profit after tax (NOPAT) for 2016 and 2015. Assume that
combined federal and state statutory tax rate is 37% for both fiscal years.
2. Compute net operating assets (NOA) for 2016 and 2015.
3. Compute return on net operating assets (RNOA) for 2016 and 2015. Comment on the
year-over-year change. Net operating assets are $3,011.7 million in 2014.
4. Disaggregate RNOA into profitability and asset turnover components (NOPM and NOAT,
respectively). Remember to include both net sales and financial services revenue in
total revenue. What explains the year-over-year change in RNOA?
Question 6
What is the difference between the traditional ROA measure (part of the traditional DuPont analysis)
and the return on net operating assets (RNOA)?
MICROSOFT CORP.
Income Statement
June 30, 2016
(in millions)
Revenue
Product
$61,502
Service
23,818
Total revenue
85,320
Cost of revenue
Product
17,880
Service and other
14,900
Total cost of revenue
32,780
Gross margin
52,540
Research and development
11,988
Sales and marketing
14,697
General and administrative
4,563
Impairment, integration, and restructuring
Operating income
1,110
20,182
Other income (expense)
Interest income
903
Gains on investments
668
Interest expense
(1,243)
Losses on derivatives and other nonoperating expenses
Income before taxes
Provision for income taxes
Net income
(759)
19,751
2,953
$16,798
Valero Energy Corporation and Subsidiaries
Consolidated Statements of Income
(Millions of Dollars)
2016
2015
Operating revenues
$ 75,659
$ 87,804
Cost of sales
65,962
73,861
Refining expenses
(747)
790
Retail expenses
4,207
4,243
Ethanol expenses
715
710
General and administrative expenses
1,894
1,842
Depreciation and amortization expense
56
0
Total costs and expenses
72,087
81,446
Operating income
3,572
6,358
Other income, net
56
46
Interest and debt expense
(446)
(433)
Income from continuing operations before income tax
expense
3,182
5,971
Income tax expense
765
1,870
Net income (loss)
2,417
4,101
Less: Net income (loss) attributable to noncontrolling
interests
128
111
Net income attributable to Valero Energy stockholders
2,289
3,990
Costs and expenses:
Asset impairment losses
VALERO ENERGY CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(Millions of Dollars)
2016
2015
Cash and temporary cash investments
$ 4,816
$ 4,114
Receivables, net
5,901
4,464
Inventories
5,709
5,898
58
218
316
204
Total current assets
16,800
14,898
Property, plant and equipment, net
26,472
26,703
2,901
2,626
46,173
44,227
115
127
6,357
4,907
694
554
1,084
1,069
Income taxes payable
78
337
Total current liabilities
8,328
6,994
Debt and capital lease obligations, less current portion
7,886
7,208
Deferred income taxes
7,361
7,060
Other long-term liabilities
1,744
1,611
25,319
22,873
7
7
7,088
7,064
(12,027)
(10,799)
Retained earnings
26,366
25,188
Accumulated other comprehensive income (loss)
(1,410)
Total Valero Energy stockholders’ equity
20,024
20,527
830
827
20,854
21,354
$ 46,173
$ 44,227
Income taxes receivable
Prepaid expenses and other
Deferred charges and other assets, net
Total assets
Current portion of debt and capital lease obligations
Accounts payable
Accrued expenses
Taxes other than income taxes
Total liabilities
Common stock
Additional paid-in capital
Treasury stock
Noncontrolling interest
Total equity
Total liabilities and stockholders’ equity
(933)
Snap-On Incorporated
Consolidated Statements of Earnings
(Amounts in millions)
For the fiscal year ended
2016
2015
Net sales
$ 3,430.4
$ 3,352.8
Cost of goods sold
(1,720.8)
(1,704.5)
Gross profit
1,709.6
1,648.3
Operating expenses
(1,054.1)
(1,053.7)
Operating earnings before financial services
655.5
594.6
Financial services revenue
281.4
240.3
Financial services expenses
(82.7)
(70.1)
Operating income from financial services
198.7
170.2
Operating earnings
854.2
764.8
Interest expense
(52.2)
(51.9)
Other income (expense) — net
(0.6)
(2.4)
Earnings before income taxes and equity earnings
801.4
710.5
Income tax expense
(244.3)
(221.2)
Earnings before equity earnings
557.1
489.3
Equity earnings, net of tax
2.5
1.3
Net earnings
559.6
490.6
Net earnings attributable to noncontrolling interests
(13.2)
(11.9)
Net earnings attributable to Snap-on Incorporated
$ 546.4
$ 478.7
Snap-On Incorporated
Consolidated Balance Sheets
Fiscal Year End
(Amounts in millions)
2016
2015
Cash and cash equivalents
$ 77.6
$ 92.8
Trade and other accounts receivable – net
598.8
562.5
Finance receivables – net
472.5
447.3
Contract receivables – net
88.1
82.1
530.5
497.8
0.0
109.9
116.5
106.3
1,884.0
1,898.7
425.2
413.5
72.8
106.3
Long-term finance receivables – net
934.5
772.7
Long-term contract receivables – net
286.7
266.6
Goodwill
895.5
790.1
Other intangibles – net
184.6
195.0
Other assets
39.9
44.0
Total assets
4,723.2
4,486.9
Notes payable and current maturities of long-term debt
301.4
18.4
Accounts payable
170.9
148.3
Accrued benefits
52.8
52.1
Accrued compensation
89.8
91.0
Franchisee deposits
66.7
64.4
Other accrued liabilities
307.9
296.3
Total current liabilities
989.5
670.5
Long-term debt
708.8
861.7
Deferred income tax liabilities
13.1
169.8
Retiree health care benefits
36.7
37.9
246.5
227.8
93.4
88.5
2,088.0
$ 2,056.2
Inventories – net
Deferred income tax assets
Prepaid expenses and other assets
Total current assets
Property and equipment – net
Deferred income tax assets
Pension liabilities
Other long-term liabilities
Total liabilities
Preferred stock
–
Common stock
67.4
$ 67.4
317.3
296.3
3,384.9
2,986.9
Additional paid-in capital
Retained earnings
–
Accumulated other comprehensive income (loss)
(498.5)
(364.2)
Treasury stock at cost
(653.9)
(573.7)
Total shareholders’ equity attributable to Snap-on Inc.
Noncontrolling interests
Total shareholders’ equity
Total liabilities and shareholders’ equity
2,617.2
2,412.7
18.0
18.0
2,635.2
2,430.7
$ 4,723.2
$ 4,486.9

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