Accounting for leverage and nonoperating returns. Extend the information set to include Net Nonoperating Obligations, or NNO. This is just nonoperationg liabilites less nonoperating assets and includes what you excluded earlier. Keep in mind that NOA - NNO = Equity, so a good check on your NNO calculation is NOA - Equity (which you already have). Check figures for year ending in 2012 provided. Calculate ROE using RNOA and nonoperating return
Nonoperating Return - Key variables	Feb. 01, 2013	Feb. 03, 2012
Net nonoperating obligations (NNO)		$ 5,823	*Nonoperating liabilities - Nonoperating assets
Average NNO
Financial leverage (FLEV)			*Average NNO / Averge stockholders' equity
Net nonoperating expense (NNE)			NOPAT - Net Income
Net nonoperating expese percent (NNEP)			*NNE / Average NNO
Spread			*RNOA - NNEP
Nonoperating Return
FLEV
x Spread
Nonoperating Return
ROE (indirect)
RNOA
Plus: Nonoperating Return
ROE (indirect)

LOWE'S COMPANIES, INC Feb. 01, 2013 Feb. 03, 2012 $ millions, except par value) Current assets Cash and cash equivalents .. . . . . . . . . . . . . . . . . . . . . . . . _. . . . . . .. .. 541 125 8,600 217 301 $1,014 286 8,355 183 234 10,072 21,970 504 1,013 $33,559 9,784 271 1,134 Current liabilities 4,657 670 824 1,510 7,708 $ 592 4,352 613 801 1,533 7,891 Accrued compensation and employee benefits. . . . . . . . . . . . . . . . . . . . . 7,035 531 704 865 9,030 455 Deferred revenue- extended protection plans . . . . . . . . . . . . . . .. . . . . . 901 18,809 17,026 Shareholders' equity Preferred stock-$5 par value, none issued . . . . . . . . . . . . . . . . . . .. . . . Common stock-$0.50 par value; shares issued and outstanding 1,110 0 0 621 14 15,852 46 at February 1, 2013 and 1,241 at February 3, 2012, respectively . .. . Capital in excess of par value . . . . .. .. . . . . . . . . . . . . . . . . . . . .. . . . . . 26 13,224 52 16,533 $33,559