E3-42.Directly Compute Nonoperating Return with Negative NNO LOS Selected balance sheet and income statement information from Amgen Inc. for 2018 follows ($ millions).

Net income . .. . ...................... .. . .
Net operating profit after tax (NOPAT) ..... . . . .
Net nonoperating expense (NNE) ... . .. . . . . . •
Average net operating assets (NOA) .... . .... .
Average net nonoperating obligations (NNO) ... .
Average total equity .. .. .. .. . .. .. .. .. .. . .. .
Compute the fo llowing measures.

a. Return on equity= Net income/Average total equity

b. RNOA = NO PAT/Average NOA

c. Nonoperating return = ROE - RNOA

d. NNEP= NNE/Average NNO

e. Spread= RNOA - NNEP f FLEV =Average NNO/Average total equity g. ROE= RNOA + (Spread x FLEV)