P3-48.Direct Computation of Nonoperating Return with Noncontrolling Interest Refer to the financial information of Costco Wholesale Corpor ation in P3-47 to answer the following requirements. In 201 8, Costco's return on equity (ROE) is 26.59% and its return on net operat ing assets

(RNOA) is 26.52%.

Required

a. Compute net nonoperating expense (NNE) and net operating profit after tax (NOPAT).

b. Compute net nonoperating obligations (NNO) for 2018 and 20 17.

c. Compute financial leverage (FLEV).

d. Compute NNEP and Spread.

e. Compute the noncontrolling interest ratio (NCI ratio).

f Confirm the relation: ROE = [RNOA + (FLEV x Spread)] x NCI ratio.

g. What does the breakdown of nonoperating return imply about the company's use of borrowed funds?

COSTCO WHOLESALE CORPORATION

(COST) •