Analysis and Interpretation of Profitability

Balance sheets and income statements for Nordstrom, Inc., follow. Refer to these financial statements to answer the requirements.

Nordstrom, Inc.

Consolidated Statements of EarningsFor Fiscal Years Ended ($ millions)2013 2012 2011

Net Sales$11,762 $10,497 $9,310

Credit card revenues 386 380 390

Total revenues 12,148 10,877 9,700

Cost of sales and related buying and occupancy costs(7,432)(6,592)(5,897)

Selling, general and administrative expenses

Retail(3,166)(2,807)(2,412)

Credit(205)(229)(273)

Earnings before interest and income taxes1,345 1,249 1,118

Interest expense, net(160)(130)(127)

Earnings before income taxes 1,185 1,119 991

Income tax expense(450)( 436) (378)

Net earnings$ 735 $683 $ 613

Nordstrom, Inc.

Consolidated Balance Sheets($ millions)February 2, 2013 January 28, 2012

Assets

Current assets

Cash and cash equivalents$ 1,285$ 1,877

Accounts receivable, net 2,129 2,033

Merchandise inventories 1,360 1,148

Current deferred tax assets, net 227 220

Prepaid expenses and other80 282

Total current assets 5,081 5,560

Land, buildings and equipment, net 2,579 2,469

Goodwill 175 175

Other assets 254 287

Total assets$ 8,089 $ 8,491

Liabilities and equity

Current liabilities

Accounts payable$ 1,011 $ 917

Accrued salaries, wages and related benefits 404 388

Other current liabilities 804 764

Current portion of long-term debt 7 506Total

current liabilities 2,226 2,575

Long-term debt, net 3,124 3,141

Deferred income taxes and other liabilities485 500

Other liabilities 341 319

Shareholders equityCommon stock, no par value: 1,000 shares authorized; 1,645 1,484

197.0 and 207.6 shares issued and outstanding

Retained earnings 315 517

Accumulated other comprehensive loss (47) (45)

Total shareholders equity1,913 1,956

Total liabilities and shareholders equity$ 8,089 $ 8,491

(a) Compute net operating profit after tax (NOPAT) for 2013. Assume that the combined federal and state statutory tax rate is 37%. (Round to the nearest whole number.)

2013 NOPAT = $Answer

b) Compute net operating assets (NOA) for 2013 and 2012.

2013 NOA = $Answer

2012 NOA = $Answer

(c) Compute RNOA, net operating profit margin (NOPM) and net operating asset turnover (NOAT) for 2013.Do not use NOPM x NOAT to calulate RNOA. (Do not round until your final answer. Round answer to two decimal places.)

2013 RNOA =Answer%

2013 NOPM =Answer%

2013 NOAT =Answer

(d) Compute net nonoperating obligations (NNO) for 2013 and 2012.

2013 NNO = $Answer

2012 NNO = $Answer

(e) Compute return on equity (ROE) for 2013. (Round answer to two decimal places.)

2013 ROE =Answer%

(f) Infer the nonoperating return component of ROE for 2013.(Use above answers to calculate. Round answer to two decimal places.)

2013 nonoperating return =Answer%