2015 $75,956 17,624 93,580 MICROSOFT CORPORATION Income Statements For the years ended June 30, (in Millions) 2016 Revenue Product $61,502 Service 23,818 Total revenue 85,320 Cost of revenue Product 17,880 Service and other 14.900 Total cost of revenue 32.780 Gross margin 52,540 Research and development 11,988 Sales and marketing 14,697 General and administrative 4,563 Impairment, integration, and restructuring 1,110 Operating income 20,182 Other income (expense), net (431) Income before taxes 19,751 Provision for income taxes 2,953 Net income $16,798 21,410 11,628 33,038 60,542 12.046 15,713 4,611 10.011 18,161 346 18,507 6,314 $ 12.193 A. Compute net operating profit after tax (NOPAT) for 2016. Assume that combined federal and state statutory tax rates are 37%. Answer: NOPATA B. Compute return on net operating assets (RNOA) for 2016. Assume equity and other investments are operating assets and net operating assets are $26,720 million in 2014 Answer: RNOA C. Compute return on equity (ROE) for 2016. Assume that stockholders' equity was $89,784 million in 2014, Answer: ROE D. What is the nonoperating return component of ROE for 2016 and 2015? Answer: Non-Operating Return 2016 = Answer: Non-Operating Return 2015 2016 2015 $ 6,510 106.730 18,277 2.251 5,892 139,660 18,356 10,431 17,872 3,733 3,642 $193,694 $ 5,595 90,931 17.908 2,902 5,461 122,797 14,731 12.053 16,939 4,835 3,117 $174,472 $ $ MICROSOFT CORPORATION Balance Sheet As of June 30, (in millions) Current assets: Cash and cash equivalents Short-term investments Accounts receivable, net Inventories Other current assets Total current assets Property and equipment, net Equity and other investments Goodwill Intangible assets, net Other long-term assets Total assets Current liabilities: Accounts payable Short-term debt Current portion of long-term debt Accrued compensation Income taxes Short-term unearned revenue Other current liabilities Total current liabilities Long-term debt Long-term unearned revenue Deferred income taxes Other long-term liabilities Total liabilities Stockholders' equity Common stock and paid-in capital Retained earnings Accumulated other comprehensive income Total stockholders' equity Total liabilities and stockholders' equity 6,898 12,904 0 5,264 580 27,468 6,243 59,357 40,783 6,441 1,476 13,640 121,697 6.591 4.985 2,499 5,096 606 23,223 6,647 49,647 27,808 2,095 1,295 13,544 94,389 68,178 2,282 1,537 71,997 $193,694 68,465 9,096 2,522 80,083 $ 174,472