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

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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

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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

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