Analysis and Interpretation of Profitability Balance sheets and income statements for Costco Wholesale Corporation follow. Costco Wholesale Corporation Consolidated Statements of Earnings For Fiscal Years Ended ($ millions) September 2, 2018 Total revenue $142,545 Operating expenses Merchandise costs 124,121 Selling, general and administrative 13,876 Preopening expenses 1,037 Operating Income 3,511 Other (income) expense Interest expense 159 Interest income and other, net (121) Income before income taxes 3,473 Provision for income taxes 1,263 Net income including noncontrolling interests 2,210 Net income attributable to noncontrolling interests (45) Net income attributable to Costco $2,165 Costco Wholesale Corporation Consolidated Balance Sheets ($ millions, except par value and share data) September 2, 2018 September 3, 2017 Current assets Cash and cash equivalents $6,055 $5,515 Short-term investments 2,173 1,233 Receivables, net 1,669 1,432 Merchandise inventories 11,040 10,803 Other current assets 1,290 272 Total current assets 22,227 19,255 Net property and equipment 20,650 18,161 Other assets 860 869 Total assets $43,737 $38,285 Current liabilities Accounts payable $11,237 $9,608 Accrued salaries and benefits 2,994 3,672 Accrued member rewards 1,057 1,930 Deferred membership fees 2,593 1,498 Other current liabilities 3,014 2,725 Total current liabilities 20,895 19,433 Long-term debt 7,456 7,542 Other liabilities 2,283 1,200 Total liabilities 30,634 28,175 Equity Preferred stock, $0.01 par value: 0 0 Common stock, $0.01 par value: 4 4 Additional paid-in-capital 6,107 4,831 Accumulated other comprehensive loss (1,199) (1,014) Retained earnings 7,887 5,988 Total Costco stockholders equity 12,799 9,809 Noncontrolling interests 304 301 Total equity 13,103 10,110 Total liabilities and equity $43,737 $38,285 Combined federal and state statutory tax rate 22% (a) Compute net operating profit after tax (NOPAT) for 2018. Assume that the combined federal and state statutory tax rate is 22%. NOPAT Answer (b) Compute net operating assets (NOA) for 2018 and 2017. Year NOA 2018 Answer 2017 Answer (c) Compute Costcos RNOA, net operating profit margin (NOPM) and net operating asset turnover (NOAT) for 2018. Numerator Denominator RNOA Answer Answer Answer Answer Numerator Denominator NOPM Answer Answer Answer Answer Numerator Denominator NOAT Answer Total revenue Answer Average net operating assets (NOA) Answer Answer (d) Compute net nonoperating obligations (NNO) for 2018 and 2017. Confirm the relation: NOA = NNO + Total equity. Year NNO 2018 Answer 2017 Answer Year NNO Total equity NOA 2018 Answer Answer 0 2017 Answer Answer 0 (e) Compute return on equity (ROE) for 2018. Numerator Denominator ROE Answer Answer Answer Answer (f) Infer the nonoperating return component of ROE for 2018. ROE RNOA Nonoperating component of ROE Answer Answer 0