Balance Sheets and Income Statement for M3 Company are below.

M3 Company Consolidated Income Statement For Years Ended ($ millions) December 31, 2022

Total Revenue $ 141,500

Operating Expenses Merchandise costs $ (123,000)

Selling, general and administrative $ (13,900)

Preopening expenses $ (100)

Operating Income $ 4,500

Other Income( Expense)

Interest Expense $ (159)

Interest Income $ 121

Income before income taxes $ 4,462

Provision for income taxes $ (1,263)

Consolidated Net Income $ 3,199

Net Income attributable to noncontrolling interests $ (65)

Net Income attributable to controlling interests $ 3,134

M3 Company Consolidated Balance Sheets $ millions, except par value and share data December 31, 2022 December 31, 2021

2022 2021

Current Assets Cash and cash equivalents $ 9,000 $ 6,750

Short-term investments $ 1,800 $ 1,875

Receivables, net $ 2,550 $ 2,100

Merchandise inventories $ 16,560 $ 14,850

Other current assets $ 480 $ 399

Total current assets $ 30,390 $ 25,974

Net Property and Equipment $ 29,550 $ 27,241

Other Assets $ 1,305 $ 1,305

Total Assets $ 61,245 $ 54,520

Current Liabilities Accounts payable $ 16,800 $ 14,000

Accrued salaries and benefits $ 4,500 $ 4,050

Accrued member rewards $ 1,575 $ 1,440

Deferred membership fees $ 2,400 $ 2,250

Other current liabilities $ 4,500 $ 4,050

Total current liablities $ 29,775 $ 25,790

Long-term Debt $ 9,732 $ 9,809

Other Liabilities $ 1,970 $ 1,800

Total Liabilities $ 41,477 $ 37,399

Stockholder's Equity Preferred stock $1.00 par value 0 0

Common stock $1.00 par value $ 6,000 $ 6,000

Additional Paid-In Capital $ 3,268 $ 3,268

Accumulated other comprehensive loss $ (1,800) $ (1,500)

Retained Earnings $ 11,850 $ 8,953

Total controlling interest stockholders' equity $ 19,318 $ 16,721

Noncontrolling Interests $ 450 $ 400

Total Equity $ 19,768 $ 17,121

Total Liabilities and Equity $ 61,245 $ 54,520

Requirements Part 1 a) Compute net operating profit after tax (NOPAT) for 2022. Assume that the combined federal and state statutory tax rate is 22%

b) Compute net operating assets (NOA) for 2022 and 2021

c) Compute and disaggregate RNOA into net operating profit margin (NOPM) and net operating asset turnover (NOAT) for 2022; confirm that RNOA = NOPM x NOAT

d) Compute net operating obligatoins (NNO) for 2022 and 2021. Confirm the relation: NOA = NNO + Total equity

e) Compute return on equity (ROE) and Return on Assets (ROA) for 2022 ONLY.

f) Infer the nonoperating return component of ROE for 2022.

g) Comment on the difference between ROE and RNOA. What does this relation suggest about the use of equity capital?

h) Compute current ratio and quick ratio for 2022 and 2021.

i) Compute times interest earned and liabilities-to-equity ratios for 2022 and 2021. In 2021, CEH Industries reported earnings before interest and tax (EBIT) of $4,000 million and interest expense of $130 million

j) Summarize your findings about the company's liquidity and solvency. Do you have any concerns about CEH Industries' ability to meet its debt obligations?

k) Confirm that ROE equals ROE computed using the component measures for profit margin, assets turnover, and financial leverage: ROE = PM x AT x FL

l) Compute adjusted ROA (assume a statutory tax rate of 22%)

Part 2

Prepare vertical and horizontal analysis on the income statement and the balance sheet and comment on positive or negative trends from this analysis. Do this for two years. Then comment on the vertical analysis within a single year as well as changes in these %'s over time (by examining trends in the same %'s for 1st year and 2nd year). Horizontal analysis only for balance sheet.