Analysis and Interpretation of Profitability Balance sheets and income statements for Johnson Johnson follow Refer to these financial statements to answer the requirements Sales to customers $61,095 $53,324 $50,514 Cost products sold 17,751 15,057 14,010 Gross profit 43,344 38,267 36,504 Selling, marketing and administrative expenses 20,451 17,433 17,211 Research expense 7,680 7,125 6,462 Purchase in process research and development 807 559 362 Restructuring 745 Interest income (452) (829) (487) Interest expense, net of portion capitalized 296 63 54 Other (income) expense, net 534 (671) (214) 30,061 23,680 23,388 Earnings before provision for taxes on income 13,283 14,587 13,116 Provision for taxes on income 2,707 3,534 3,056 Net earnings $ 10,576 $ 11,053 $ 10,060 Assets Cash and cash equivalents $7,770 $4,083 Marketable securities 1,545 1 Accounts receivable trade, net 9,444 8,712 Inventories 5,110 4,889 Deferred taxes on income 2,609 2,094 Prepaid expenses and other receivables 3,467 3,196 Total current assets 29,945 22,975 Marketable securities, noncurrent 2 16 Property, Plant and equipment, net 14,185 13,044 Intangible assets, net 14,640 15,348 Goodwill, net 14,123 13,340 Deferred taxes on income 4,889 3,210 Other assets 3,170 2,623 Total assets $ 80,954 $ 70,556 Liabilities and Shareholders' Equity Loans and notes payable $2,463 $4,597 Accounts payable 6,909 5,961 Accrued liabilities 6,412 4,587 Accrued rebates, returns and promotions 2,318 2,189 Accrued salaries, wages and commissions 1,512 1,391 Accrued taxes on income 223 724 Total current liabilities 19,837 19,161 Long term debt 7,074 2,014 Deferred taxes on income 1,493 1,319 Employee related obligations 5,402 5,584 Other liabilities 3,829 3,160 Total liabilities 37,635 31,238 Shareholders' equity Preferred stock without par value (authorized and unissued 2,000,000 shares) Common stock par value $1 00 per share 3,120 3,120 Accumulated other comprehensive income (693) (2,118) Retained earnings 55,280 49,290 57,707 50,292 Less common stock held in treasury, at cost 14,388 10,974 Total Shareholders' equity 43,319 39,318 Total liability and shareholders' equity $ 80,954 $ 70,556 (a) Compute net operating profit after tax (NOPAT) for 2007 Assume that the combined federal and statutory rate is 37 1 Treatother (income) expense,netas non operating Round your answer to the nearest whole number 2007 NOPAT $Answer (b) Compute net operating assets (NOA) for 2007 and 2006 2007 NOA $Answer 2006 NOA $Answer (c) Compute RNOA, net operating profit margin (NOPM) and net operating asset turnover (NOAT) for 2007 Do not use NOPM x NOAT to caculate RNOA (Do not round until your final answers Round answers to two decimal places ) 2007 RNOA Answer 2007 NOPM Answer 2007 NOAT Answer (d) Compute net nonoperating obligations (NNO) for 2007 and 2006 2007 NNO $Answer 2006 NNO $Answer (e) Compute return on equity (ROE) for 2007 (Round your answers to two decimal places Do not round until your final answer ) 2007 ROE Answer (f) Infer the nonoperating return component of ROE for 2007 (Use answers from above to calculate Round your answer to two decimal places ) 2007 nonoperating return Answer (g) Comment on the difference between ROE and RNOA Which of the following statements best describes the inference from the difference between JNJ's ROE and RNOA ROE RNOA implies that JNJ has taken on too much financial leverage The high financial leverage results in a higher interest rate on JNJ's debt, therefore the cost of debt is greater ROE RNOA implies that JNJ has increased its financial leverage during the period The increase in financial leverage also increases JNJ's risk, therefore increasing the expected ROE by JNJ's stockholders ROE RNOA implies that JNJ's equity has grown faster than its NOA The faster increase of equity compared to NOA allows higher dividends to be paid to JNJ's stockholders ROE RNOA implies the JNJ is able to borrow money to fund operating assets that yield a return greater than its cost of debt Please answer all parts of the question

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Analysis and Interpretation of Profitability Balance sheets and income statements for Johnson & Johnson follow. Refer to these financial statements to answer the requirements. Sales

Analysis and Interpretation of Profitability Balance sheets and income statements for Johnson & Johnson follow. Refer to these financial statements to answer the requirements.

Sales to customers	$61,095	$53,324	$50,514
Cost products sold	17,751	15,057	14,010
Gross profit	43,344	38,267	36,504
Selling, marketing and administrative expenses	20,451	17,433	17,211
Research expense	7,680	7,125	6,462
Purchase in-process research and development	807	559	362
Restructuring	745	--	--
Interest income	(452)	(829)	(487)
Interest expense, net of portion capitalized	296	63	54
Other (income) expense, net	534	(671)	(214)
	30,061	23,680	23,388
Earnings before provision for taxes on income	13,283	14,587	13,116
Provision for taxes on income	2,707	3,534	3,056
Net earnings	$ 10,576	$ 11,053	$ 10,060

Assets
Cash and cash equivalents	$7,770	$4,083
Marketable securities	1,545	1
Accounts receivable trade, net	9,444	8,712
Inventories	5,110	4,889
Deferred taxes on income	2,609	2,094
Prepaid expenses and other receivables	3,467	3,196
Total current assets	29,945	22,975
Marketable securities, noncurrent	2	16
Property, Plant and equipment, net	14,185	13,044
Intangible assets, net	14,640	15,348
Goodwill, net	14,123	13,340
Deferred taxes on income	4,889	3,210
Other assets	3,170	2,623
Total assets	$ 80,954	$ 70,556
Liabilities and Shareholders' Equity
Loans and notes payable	$2,463	$4,597
Accounts payable	6,909	5,961
Accrued liabilities	6,412	4,587
Accrued rebates, returns and promotions	2,318	2,189
Accrued salaries, wages and commissions	1,512	1,391
Accrued taxes on income	223	724
Total current liabilities	19,837	19,161
Long-term debt	7,074	2,014
Deferred taxes on income	1,493	1,319
Employee related obligations	5,402	5,584
Other liabilities	3,829	3,160
Total liabilities	37,635	31,238
Shareholders' equity
Preferred stock-without par value (authorized and unissued 2,000,000 shares)	--	--
Common stock-par value $1.00 per share	3,120	3,120
Accumulated other comprehensive income	(693)	(2,118)
Retained earnings	55,280	49,290
	57,707	50,292
Less: common stock held in treasury, at cost	14,388	10,974
Total Shareholders' equity	43,319	39,318
Total liability and shareholders' equity	$ 80,954	$ 70,556

(a) Compute net operating profit after tax (NOPAT) for 2007. Assume that the combined federal and statutory rate is: 37.1%.

Treatother (income) expense,netas non-operating. Round your answer to the nearest whole number. 2007 NOPAT = $Answer

(b) Compute net operating assets (NOA) for 2007 and 2006. 2007 NOA = $Answer 2006 NOA = $Answer

(c) Compute RNOA, net operating profit margin (NOPM) and net operating asset turnover (NOAT) for 2007. Do not use NOPM x NOAT to caculate RNOA. (Do not round until your final answers. Round answers to two decimal places.) 2007 RNOA =Answer% 2007 NOPM =Answer% 2007 NOAT =Answer

(d) Compute net nonoperating obligations (NNO) for 2007 and 2006. 2007 NNO = $Answer 2006 NNO = $Answer

(e) Compute return on equity (ROE) for 2007. (Round your answers to two decimal places. Do not round until your final answer.) 2007 ROE =Answer%

(f) Infer the nonoperating return component of ROE for 2007. (Use answers from above to calculate. Round your answer to two decimal places.) 2007 nonoperating return =Answer%

(g) Comment on the difference between ROE and RNOA. Which of the following statements best describes the inference from the difference between JNJ's ROE and RNOA?

ROE>RNOA implies that JNJ has taken on too much financial leverage. The high financial leverage results in a higher interest rate on JNJ's debt, therefore the cost of debt is greater.ROE>RNOA implies that JNJ has increased its financial leverage during the period. The increase in financial leverage also increases JNJ's risk, therefore increasing the expected ROE by JNJ's stockholders.ROE>RNOA implies that JNJ's equity has grown faster than its NOA. The faster increase of equity compared to NOA allows higher dividends to be paid to JNJ's stockholders.ROE>RNOA implies the JNJ is able to borrow money to fund operating assets that yield a return greater than its cost of debt.

Please answer all parts of the question.