E11.6. Profitability Measures for Kimberly-Clark Corporation (Easy). Below are summary numbers from reformulated balance sheets for 2007 and 2006 for Kimberly-Clark Corporation, the paper products company, along with numbers from the reformulated income statement for 2007 (in millions). 2007 2006 Operating assets $18,057.0 $16,796 2 Operating liabilities 6,011.8 5.927.2 Financial assets 382.7 270.8 Financial obligations 6,496.4 4,335.4 Operating income (after tax) Net financial expense af tax)

a. Calculate the following for 2007 and 2006: $2,740.1 147.3 (1) Net operating assets (2) Net financial obligations (3) Shareholders' equity

b. Calculate return on common equity (ROCE), return on net operating assets (RNOA), financial leverage (FLEV), and net borrowing cost (NBC) for 2007. Use beginning-of- period balance sheet numbers in denominators.

c. Show that the financing leverage equation works with your calculations.

d. Calculate the operating profit margin (PM) and asset turnover (ATO) for 2007 and show that RNOA PMXATO. Real World Connection Exercises E4.8, E6.14, 57.8 and E10.10 also cover Kimberly-Clark, as does Minicase M5.3. The Continuing Case at the end of each chapter is a comprehensive analysis of the firm.