Balance sheets and income statements for Target Corporation follow.

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Required

a. Compute net operating profit after tax (NOPAT) for 2008 and 2007. Assume that the combined federal and state statutory tax rates for both 2008 and 2007 are 39\%.

b. Compute net operating assets (NOA) for 2008 and 2007 }

c. Compute and disaggregate Target's RNOA into net operating profit margin (NOPM) and net operating asset turnover (NOAT) for 2008 and 2007 ; the 2006 NOA is \(\$ 24,451\) million. Comment on the drivers of the change in Target's RNOA.

d. Compute net nonoperating obligations (NNO) for 2008 and 2007. Confirm the relation: \(\mathrm{NOA}=\) NNO + Stockholders' equity.

e. Compute return on equity (ROE) for 2008 and 2007 ; the 2006 stockholders' equity is \(\$ 14,205\) million.

f. Infer the nonoperating return component of ROE for both 2008 and 2007.
g. Comment on the difference between ROE and RNOA. What does this relation suggest about Target's use of equity capital?

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Income Statement For Fiscal Years Ended ($ millions) 2008 2007 2006 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 expense 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 Provision for income taxes.. 1,776 1,710 1,452 Net earnings... $ 2,849 $2,787 $ 2,408