3 -45. Compute the DuPont Disaggr egation o f R OE Refer to the balance s heets and in come s tatement be low for Facebook Inc.

FACEBOOK INC.
Consolidated Statement of Income For Year Ended December 31, $ millions Revenue ...... . .. . ........ . ..... • .... . • . ... . ..... .... . . ... . ..
Costs and expenses Cost of revenue ..... . .. . .... • . . .. •. . • .. • . . .. • . . • .. ..... • .. • ...
Research and development .... • . . .. • . . • .. • .... .. . ... ..... . .. . . . .
Marketing and sales . ....... . . • .... . .. . . . • . ... . ...... .. .. . .. . ...
General and administrative . .. .. . .. .. ..... .. . . .. . . .. . . .. . .. . . .. .. .
Total costs and expenses . . .. .. . .. .. ... . ... . • .. ... . . • .. . .. .. . . . • .
Income from operations ............ . .. . . . . . ... . ...... . . . . . ..... .
Interest and other income (expense), net. ... .. . . .. .. . ... .. . .. .. . .. • .
Income before provision for income taxes .. .. . . . .. . . . . .. .. . . . . . . . . . .
Provision for income taxes ..... . .. .. .. . ... . ... . .. . .............. .
Net income ... .. ... .. .. .. ... . .... . .. . .. . .... . .. . . . ..... . . . . . . .
FACEBOOK INC.
Consolidated Balance Sheet At December 31, $ millions Current assets Cash and cash equivalents .. . . .. .. .. . • .. • .. .. • . . • ...
Marketable securities .... .. . . .... . ..... • . . . . . ......
Accounts receivable, net. .. .................. . .. . .. .
Prepaid expenses and other current assets .. . ... • .. • ...
Total current assets . .... . ..... . ........... . . .. . .. .
Property and equipment, net ... . .. .. .. . . .. . . . .. .. . ... .
Intangible assets, net . . .... ... • .... • ..•.. • . ... • .. • ...
Goodwill .............. . . . .. . .. .. ... . ... . . .. ... . .. .
Other assets ... . . .. . .. .... .. • .... • ..... • . ... • ......
2018 $10,019 31 ,095 7,587 1,779 50,480 24,683 1,294 18,301 2,576 Total assets ....... . ... . .... • ....• . . • .. • . . ..• . . • .. . $97,334 Current liabilities Accounts payable ... . . . . . .. . .. .. ... . . . . . . .. . . . .. . .
Partners payable . . ........ . ........ . ... . ... • ......
Accrued expenses and other current liabilities ... . • .. . ...
Deferred revenue and deposits .... . ....... . ... . ....• .
Total current liabilities ... . ... . .. ... .. • .. • .. .. . . . . ...
Other liabilities ..... . ... .. ... • .. .. • . . • .. • . . .. .. . . .. .
Total liabilities . . .... .. . . .. .... .. .. .. ... . . .. .. .. .. . . .
Stockholders' equity Common stock and additional paid-in capital ... . ... . . . . . . .
Accumulated other comprehensive loss .. ...... . .. ... . . • .
Retained earnings .. . ... . ..... .. ... . . . .. • . . .. •. . • .. .
$ 820 541 5,509 147 7,017 6,190 13,207 42,906 (760)
41 ,981 Total stockholders' equity. . . . . . . . . . . . . . • . . • . . . . • . . • . . . 84, 127 Total liabilities and stockholders' equity. . . . . . . . . . . . . . . . . . $97,334

a. Compute return on equity (ROE).
2018 $55,838 9,355 10,273 7,846 3,451 30,925 24,913 448 25,361 3,249 $22,112 2017 $ 8,079 33,632 5,832 1,020 48,563 13,721 1,884 18,221 2,135 $84,524 $ 380 390 2,892 98 3,760 6,417 10,177 40,584 (227)
33,990 74,347 $84,524

b. Apply the DuPont disaggregation into return on assets (ROA) and financial leverage.

c. Calculate the profitabi lity and productivity components of ROA.

d. Confirm the full DuPont disaggregation: ROE= PM x AT x FL.