Analysis and Interpretation of Ratios When RNOA Exceeds ROE Refer to the balance sheets and income statement below for Facebook Inc. FACEBOOK INC. Consolidated Statement of Income For Year Ended December 31, 5 millions 2018 Revenue $55,838 Costs and expenses Cost of revenue 9,355 Research and development 10,273 Marketing and sales 7,846 General and administrative 3,451 Total costs and expenses Income from operations Interest and other income (expense), net Income before provision for income taxes 448 30,925 24,913 Provision for income taxes Net income 25,361 3,249 $22,112 FACEBOOK INC. Consolidated Balance Sheet At December 31, $ millions 2018 2017 Current assets Cash and cash equivalents Marketable securities Accounts receivable, net Prepaid expenses and other current assets Total current assets Property and equipment, net $10,019 $8,079 31,095 33,632 7,587 5,832 1,779 1,020 50,480 48,563 24,683 13,721 Intangible assets, net Goodwill Other assets Total assets Current liabilities 1,294 1,884 18,301 18,221 $2,576 $2,135 $97,334 $84,524 Accounts payable $820 $380 Partners payable 541 390 Accrued expenses and other current liabilities 5,509 2,892 Deferred revenue and deposits 147 98 Total current liabilities 7,017 3,760 Other liabilities Total liabilities Stockholders' equity 6,190 13.207 10,177 6,417 Common stock and additional paid-in capital 42,906 40,584 (760) (227) 41,981 33,990 84,127 74,347 $97,334 $84,524 Accumulated other comprehensive loss Retained earnings Total stockholders' equity Total liabilities and stockholders' equity Use these financial statements to answer the requirements. Required ($ millions) a. Compute net operating profit after tax (NOPAT) for 2018. Assume that the combined federal and state statutory tax rate is 22%. b. Compute net operating assets (NOA) for 2018 and 2017. NOA for 2017: 87,741 NOA for 2018: 78,629 x c. Compute RNOA and disaggregate it into net operating profit margin (NOPM) and net operating asset turnover (NOAT) for 2018. Note: Do not round until your final answer. Note: For NOPM and RNOA, round final percentages to two decimal places (for example, enter 6.66% for 6.6555%). Note: For NOAT, round final amount to four decimal places (for example, enter 6.7756 for 6.775555). NOPM NOAT RNOA 35.43% x 0.6364x 22.55% x d. Compute return on equity (ROE) for 2018. Note: Do not round until your final answer. Note: Round final answer percentage to two decimal places (for example, enter 6.66% for 6.6555%). 26.28 x % Check