a. Compute net operating profit after tax (NOPAT) for 201 8. Assume that the combined federal and state statutory tax rate is 22%. b. Compute net operating assets (NOA) for 2018 and 2017.

c. Compute RNOA and disaggregate it into net operating profit margin (NOPM) and net operating asset turnover (NOAT) for 2018; confirm that RNOA = NOPM x NOAT. d. Compute net nonoperating obligations (NNO) for 2018 and 2017. Confirm the relation: NOA= NNO + Shareholders' equity. e. Compute return on equity (ROE) for 20 I 8. f Infer the nonoperating return component of ROE for 2018. g. Comment on the difference between ROE and RNOA. What does this relation suggest about Netflix's use of equity capital?

P4-50. Analysis and Interpretation of ROE and RNOA with No Noncontrolling Interest The 2018 balance sheets and income statement for Netflix Inc. follow. Refer to these financial state- ments to answer the requirements. NETFLIX INC. Consolidated Statement of Earnings For Year Ended December 31, $ thousands 2018 Revenues.. Cost of revenues Marketing Technology and development. General and administrative. Operating income Other income (expense) Interest expense. Interest and other income. $15,794,341 9,967,538 2,369,469 1,221,814 630,294 1,605,226 (420,493) 41,725 Income before income taxes Provision for income taxes 1,226,458 15,216 $ 1,211,242 Net income 2017 NETFLIX INC. Consolidated Balance Sheets in thousands, except par value 2018 Current assets Cash and cash equivalents... $3,794,483 Current content assets, net... 5,151,186 Other current assets.. 748,466 Total current assets.. 9,694,135 Noncurrent content assets, net. 14,960,954 Property and equipment, net 418,281 Other noncurrent assets. . 901,030 Total assets $25,974,400 $2,822,795 4,310,934 536,245 7,669,974 10,371,055 319,404 652,309 $19,012,742 $ 4,173,041 359,555 315,094 618,622 Current liabilities Current content liabilities.. Accounts payable .. Accrued expenses Deferred revenue Total current liabilities. Noncurrent content liabilities Long-term debt..... Other noncurrent liabilities Total liabilities. .. Stockholders' equity Preferred stock, $0.001 par value Common stock, $0.001 par value... Accumulated other comprehensive loss. Retained earnings Total stockholders' equity... Total liabilities and stockholders' equity. $ 4,686,019 562,985 477,417 760,899 6,487,320 3,759,026 10,360,058 129,231 20,735,635 5,466,312 3,329,796 6,499,432 135,246 15,430,786 0 2,315,988 (19,582) 2,942,359 5,238,765 0 1,871,396 (20,557) 1,731,117 3,581,956 $19,012,742 $25,974,400 P4-50. Analysis and Interpretation of ROE and RNOA with No Noncontrolling Interest The 2018 balance sheets and income statement for Netflix Inc. follow. Refer to these financial state- ments to answer the requirements. NETFLIX INC. Consolidated Statement of Earnings For Year Ended December 31, $ thousands 2018 Revenues.. Cost of revenues Marketing Technology and development. General and administrative. Operating income Other income (expense) Interest expense. Interest and other income. $15,794,341 9,967,538 2,369,469 1,221,814 630,294 1,605,226 (420,493) 41,725 Income before income taxes Provision for income taxes 1,226,458 15,216 $ 1,211,242 Net income 2017 NETFLIX INC. Consolidated Balance Sheets in thousands, except par value 2018 Current assets Cash and cash equivalents... $3,794,483 Current content assets, net... 5,151,186 Other current assets.. 748,466 Total current assets.. 9,694,135 Noncurrent content assets, net. 14,960,954 Property and equipment, net 418,281 Other noncurrent assets. . 901,030 Total assets $25,974,400 $2,822,795 4,310,934 536,245 7,669,974 10,371,055 319,404 652,309 $19,012,742 $ 4,173,041 359,555 315,094 618,622 Current liabilities Current content liabilities.. Accounts payable .. Accrued expenses Deferred revenue Total current liabilities. Noncurrent content liabilities Long-term debt..... Other noncurrent liabilities Total liabilities. .. Stockholders' equity Preferred stock, $0.001 par value Common stock, $0.001 par value... Accumulated other comprehensive loss. Retained earnings Total stockholders' equity... Total liabilities and stockholders' equity. $ 4,686,019 562,985 477,417 760,899 6,487,320 3,759,026 10,360,058 129,231 20,735,635 5,466,312 3,329,796 6,499,432 135,246 15,430,786 0 2,315,988 (19,582) 2,942,359 5,238,765 0 1,871,396 (20,557) 1,731,117 3,581,956 $19,012,742 $25,974,400