Adjusting for Negative Equity Phillip Morris reported the following information in its 2018 Form 10-K. Dec. 31, 2018 Dec. 31, 2017 $0 $0 1,939 31,944 (10,111) 23,772 1,972 30,755 (8,535) 24,192 $ millions Stockholders' (Deficit) Equity Common stock, no par value (2,109,316,331 shares issued in 2018 and 2017) Additional paid-in capital Earnings reinvested in the business Accumulated other comprehensive losses Total stockholders' equity before treasury stock Less: cost of repurchased stock (554,736,610 and 556,098,569 shares in 2018 and 2017, respectively) Total PMI stockholders' deficit Noncontrolling interests Total stockholders' deficit Net earnings Net earnings attributable to noncontrolling interests Net earnings attributable to PMI 35,301 (11,529) 1,720 $(9,809) $8,286 375 35,382 (11,190) 1,856 $19,334) $7,911 a. Compute ROE for 2018 using the equity numbers as reported. Note: Round the percentage to one decimal place (for example, enter 14.6% for 14.55555%). (34.8) X % How do you interpret this ratio? Ratio is not interpretable b. Add back treasury shares to adjust for the company's negative equity. Recompute ROE for 2018. Note: Round the percentage to one decimal place (for example, enter 14.6% for 14.55555%). 39.5 X % Does the adjusted ratio better captures the company's performance during 2018? Yes