This exercise is built around Kroger’s financial statements from the chapter. Total shareholders’ equity—The Kroger Co. was $5,384 million at February 1, 2014.

Required:

1. Kroger earned an ROA of 6.9% in fiscal 2014. What was ROCE that year?

2. ROA at the company fell to 3.7% in fiscal 2017 (adjusted to eliminate the one-time effect on earnings of the Tax Cuts and Jobs Act). What was ROCE that year (also adjusted for the Tax Cuts and Jobs Act)?

3. Did financial leverage help or hurt Kroger in fiscal 2017? How can you tell?