4. The following exhibit (all figures in $ million) shows the Balance Sheets of XYZ Inc for the years ended 31 December 2018 and 31 December 2019 respectively.

The firms income tax rate is 35%. The firm reported $15 million in interest income and $98 million in interest expense for 2019. Sales revenue was $3,726 million. Sales revenue is forecasted to grow at a 6% rate per year in the future, on a constant asset turnover of 0.65. Operating profit margins of 14% are expected to be earned each year. Further, financial assets and financial liabilities will grow at 10% annually, and accounts payable will grow at 6%.

Required:

Forecast the return on net operating assets (RNOA) for 2020. Define RNOA as net operating income divided by the closing value of net operating assets for that year.

2018 2019 Assets Accounts Receivable Inventory PPE Financial Assets Balance Sheet for the years ended 31 December 2018 2019 Liabilities and Equity 790 940 Accounts Payable 840 910 Long-term debt 2,710 2,840 Shareholders' Equity 550 610 4,890 5,300 1,040 2,420 1,430 1,200 2,230 1,870 4,890 5,300