11) Consider a retail firm with a net profit margin of 3.5%, a total asset turnover of 1.8, total assets of $44 million, and a book value of equity of $18 million. a. What is the firm's current ROE? b. How does it compare with Macy's data for 2018? c. If the firm increased its net profit margin to 4%, what would its ROE be? CIS, C . CONSOLIDATED STATEMENTS OF INCOME (millions, except per share data) 2018 24,971 $ 768 Net sales Credit card revenues, net. 2017 24.939 702 $ 2016 25,908 656 (15,666) (9,257) (15,215) (9,039) 389 (136) 1,738 (15,181) (8,954) 544 (186) 1,864 209 (479) 1,371 55 57 (88) (261) (105) (321) 10 (367) (33) Cost of sales ................... Selling, general and administrative expenses. Gains on sale of real estate.... Restructuring, impairment, store closing and other costs.. Operating income Benefit plan income, net.. Settlement charges. Interest expense. Gains (losses) on early retirement of debt....... Interest income..... Income before income taxes. Federal, state and local income tax benefit (expense). Net income Net loss attributable to noncontrolling interest Net income attributable to Macy's, Inc. shareholders Basic earnings per share attributable to Macy's, Inc. shareholders....... Diluted earnings per share attributable to Macy's, Inc. shareholders. 1,420 (322) 1,098 10 1,108 1,516 39 1,555 11 1,566 $ S $ $ 3.60 $ 5.13 $ 3.56 $ 5.10 $ 2.02 MACY'S, INC. CONSOLIDATED BALANCE SHEETS (millions) February 2, 2019 February 3, 2018 $ 1,162 400 5,263 620 7,445 6,637 3,908 478 726 19,194 1,455 363 5,178 650 7,646 6,672 3,897 488 880 19,583 s S 22 ASSETS Current Assets: Cash and cash equivalents ................... Receivables.................. Merchandise inventories... Prepaid expenses and other current assets Total Current Assets.. Property and Equipment-net... Goodwill..... Other Intangible Assets-net.. Other Assets.. Total Assets. LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Short-term debt. Merchandise accounts payable Accounts payable and accrued liabilities Income taxes............ Total Current Liabilities. Long-Term Debt.. Deferred Income Taxes... Other Liabilities Shareholders' Equity: Common stock (307.5 and 304.8 shares outstanding) Additional paid-in capital Accumulated equity. Treasury stock. Accumulated other comprehensive loss.. Total Macy's, Inc. Shareholders' Equity Noncontrolling interest ....... Total Shareholders' Equity... Total Liabilities and Shareholders' Equity... 43 1,655 3,366 168 5,232 4,708 1,238 1,580 1,590 3,271 296 5,179 5,861 1,148 1,662 652 8,050 (1,318) (951) 6,436 676 7,246 (1,456) (724) 5,745 (12) 5,733 19,583 6,436 19,194
