Balance sheets and income statements for Costco Wholesale Corporation follow. COSTCO WHOLESALE CORPORATION Consolidated Statements of Income Aug. 28, 2016 Aug. 30, 2015 Aug. 31, 2014 For Fiscal Years Ended ($ millions) Revenue Net sales... Membership fees Total revenue.. Operating expenses Merchandise costs... Selling, general and administrative. Preopening expenses.. $113,666 2,533 $110,212 $116,073 2,646 2,428 112,640 118,719 116,199 102,901 12,068 78 101,065 11,445 65 98,458 10,899 63 Operating income.. 3,672 3,624 3,220 Other income (expense) Interest expense.. Interest income and other, net (133) 80 (124) 104 (113) 90 Income before taxes Provision for income taxes. 3,619 1,243 3,604 1,195 3,197 1,109 Net income including noncontrolling interests. Net income attributable to noncontrolling interests Net income attributable to Costco. 2,376 (26) $ 2,350 2,409 (32) $ 2,377 2,088 (30) $ 2,058 COSTCO WHOLESALE CORPORATION Consolidated Balance Sheets Aug. 28, 2016 Aug. 30, $ millions, except par value and share data 2015 Assets Current assets Cash and cash equivalents. Short-term investments Receivables, net.... Merchandise inventories.. Other current assets.. $ 3,379 1,350 1,252 8,969 268 $ 4,801 1,618 1,224 8,908 228 ... Total current assets. 15,218 16,779 Property and equipment Land.. Buildings and improvements Equipment and fixtures.. Construction in progress 5,395 13,994 6,077 701 4,961 12,618 5,274 811 Gross property and equipment.. Less accumulated depreciation and amortization 26,167 (9,124) 17,043 23,664 (8,263) 15,401 Net property and equipment. Other assets... .... 902 837 $33,163 $33,017 Total assets. continued Aug. 28, 2016 Aug. 30, 2015 $ millions, except par value and share data Liabilities and equity Current liabilities Accounts payable.... Current portion long-term debt. Accrued salaries and benefits Accrued member rewards . Deferred membership fees. Other current liabilities. $ 7,612 1,100 $ 9,011 1,283 2,468 2,629 869 813 1,362 1,269 1,695 2,003 Total current liabilities.. Long-term debt, excluding current portion Other liabilities 15,575 16,539 4,061 4,852 1,195 783 Total liabilities. Equity Preferred stock, $0.005 par value: 100,000,000 shares authorized; no shares issued and outstanding... Common stock, $0.005 par value: 900,000,000 shares authorized; 437,524,000 and 437,952,000 shares issued and outstanding. Additional paid-in-capital.. Accumulated other comprehensive loss Retained earnings.. Total Costco stockholders' equity Noncontrolling interests.. 20,831 22,174 5,218 (1,121) 6,518 5,490 (1,099) 7,686 10,617 226 12,079 253 10,843 Total equity... Total liabilities and equity. 12,332 $33,163 $3,017 Required a. Compute net operating profit after tax (NOPAT) for 2016. Assume that the combined federal and state statutory tax rate is 37%. b. Compute net operating assets (NOA) for 2016 and 2015. c. Compute and disaggregate Costco's RNOA into net operating profit margin (NOPM) and net oper- ating asset turnover (NOAT) for 2016; confirm that RNOA = NOPM X NOAT. d. Compute net nonoperating obligations (NNO) for 2016 and 2015. Confirm the relation: NOA NNO + Total equity. e. Compute return on equity (ROE) for 2016. f. Infer the nonoperating return component of ROE for 2016. g. Comment on the difference between ROE and RNOA. What does this relation suggest about Cost- co's use of equity capital? %3D Balance sheets and income statements for Costco Wholesale Corporation follow. COSTCO WHOLESALE CORPORATION Consolidated Statements of Income Aug. 28, 2016 Aug. 30, 2015 Aug. 31, 2014 For Fiscal Years Ended ($ millions) Revenue Net sales... Membership fees Total revenue.. Operating expenses Merchandise costs... Selling, general and administrative. Preopening expenses.. $113,666 2,533 $110,212 $116,073 2,646 2,428 112,640 118,719 116,199 102,901 12,068 78 101,065 11,445 65 98,458 10,899 63 Operating income.. 3,672 3,624 3,220 Other income (expense) Interest expense.. Interest income and other, net (133) 80 (124) 104 (113) 90 Income before taxes Provision for income taxes. 3,619 1,243 3,604 1,195 3,197 1,109 Net income including noncontrolling interests. Net income attributable to noncontrolling interests Net income attributable to Costco. 2,376 (26) $ 2,350 2,409 (32) $ 2,377 2,088 (30) $ 2,058 COSTCO WHOLESALE CORPORATION Consolidated Balance Sheets Aug. 28, 2016 Aug. 30, $ millions, except par value and share data 2015 Assets Current assets Cash and cash equivalents. Short-term investments Receivables, net.... Merchandise inventories.. Other current assets.. $ 3,379 1,350 1,252 8,969 268 $ 4,801 1,618 1,224 8,908 228 ... Total current assets. 15,218 16,779 Property and equipment Land.. Buildings and improvements Equipment and fixtures.. Construction in progress 5,395 13,994 6,077 701 4,961 12,618 5,274 811 Gross property and equipment.. Less accumulated depreciation and amortization 26,167 (9,124) 17,043 23,664 (8,263) 15,401 Net property and equipment. Other assets... .... 902 837 $33,163 $33,017 Total assets. continued Aug. 28, 2016 Aug. 30, 2015 $ millions, except par value and share data Liabilities and equity Current liabilities Accounts payable.... Current portion long-term debt. Accrued salaries and benefits Accrued member rewards . Deferred membership fees. Other current liabilities. $ 7,612 1,100 $ 9,011 1,283 2,468 2,629 869 813 1,362 1,269 1,695 2,003 Total current liabilities.. Long-term debt, excluding current portion Other liabilities 15,575 16,539 4,061 4,852 1,195 783 Total liabilities. Equity Preferred stock, $0.005 par value: 100,000,000 shares authorized; no shares issued and outstanding... Common stock, $0.005 par value: 900,000,000 shares authorized; 437,524,000 and 437,952,000 shares issued and outstanding. Additional paid-in-capital.. Accumulated other comprehensive loss Retained earnings.. Total Costco stockholders' equity Noncontrolling interests.. 20,831 22,174 5,218 (1,121) 6,518 5,490 (1,099) 7,686 10,617 226 12,079 253 10,843 Total equity... Total liabilities and equity. 12,332 $33,163 $3,017 Required a. Compute net operating profit after tax (NOPAT) for 2016. Assume that the combined federal and state statutory tax rate is 37%. b. Compute net operating assets (NOA) for 2016 and 2015. c. Compute and disaggregate Costco's RNOA into net operating profit margin (NOPM) and net oper- ating asset turnover (NOAT) for 2016; confirm that RNOA = NOPM X NOAT. d. Compute net nonoperating obligations (NNO) for 2016 and 2015. Confirm the relation: NOA NNO + Total equity. e. Compute return on equity (ROE) for 2016. f. Infer the nonoperating return component of ROE for 2016. g. Comment on the difference between ROE and RNOA. What does this relation suggest about Cost- co's use of equity capital? %3D Balance sheets and income statements for Costco Wholesale Corporation follow. COSTCO WHOLESALE CORPORATION Consolidated Statements of Income Aug. 28, 2016 Aug. 30, 2015 Aug. 31, 2014 For Fiscal Years Ended ($ millions) Revenue Net sales... Membership fees Total revenue.. Operating expenses Merchandise costs... Selling, general and administrative. Preopening expenses.. $113,666 2,533 $110,212 $116,073 2,646 2,428 112,640 118,719 116,199 102,901 12,068 78 101,065 11,445 65 98,458 10,899 63 Operating income.. 3,672 3,624 3,220 Other income (expense) Interest expense.. Interest income and other, net (133) 80 (124) 104 (113) 90 Income before taxes Provision for income taxes. 3,619 1,243 3,604 1,195 3,197 1,109 Net income including noncontrolling interests. Net income attributable to noncontrolling interests Net income attributable to Costco. 2,376 (26) $ 2,350 2,409 (32) $ 2,377 2,088 (30) $ 2,058 COSTCO WHOLESALE CORPORATION Consolidated Balance Sheets Aug. 28, 2016 Aug. 30, $ millions, except par value and share data 2015 Assets Current assets Cash and cash equivalents. Short-term investments Receivables, net.... Merchandise inventories.. Other current assets.. $ 3,379 1,350 1,252 8,969 268 $ 4,801 1,618 1,224 8,908 228 ... Total current assets. 15,218 16,779 Property and equipment Land.. Buildings and improvements Equipment and fixtures.. Construction in progress 5,395 13,994 6,077 701 4,961 12,618 5,274 811 Gross property and equipment.. Less accumulated depreciation and amortization 26,167 (9,124) 17,043 23,664 (8,263) 15,401 Net property and equipment. Other assets... .... 902 837 $33,163 $33,017 Total assets. continued Aug. 28, 2016 Aug. 30, 2015 $ millions, except par value and share data Liabilities and equity Current liabilities Accounts payable.... Current portion long-term debt. Accrued salaries and benefits Accrued member rewards . Deferred membership fees. Other current liabilities. $ 7,612 1,100 $ 9,011 1,283 2,468 2,629 869 813 1,362 1,269 1,695 2,003 Total current liabilities.. Long-term debt, excluding current portion Other liabilities 15,575 16,539 4,061 4,852 1,195 783 Total liabilities. Equity Preferred stock, $0.005 par value: 100,000,000 shares authorized; no shares issued and outstanding... Common stock, $0.005 par value: 900,000,000 shares authorized; 437,524,000 and 437,952,000 shares issued and outstanding. Additional paid-in-capital.. Accumulated other comprehensive loss Retained earnings.. Total Costco stockholders' equity Noncontrolling interests.. 20,831 22,174 5,218 (1,121) 6,518 5,490 (1,099) 7,686 10,617 226 12,079 253 10,843 Total equity... Total liabilities and equity. 12,332 $33,163 $3,017 Required a. Compute net operating profit after tax (NOPAT) for 2016. Assume that the combined federal and state statutory tax rate is 37%. b. Compute net operating assets (NOA) for 2016 and 2015. c. Compute and disaggregate Costco's RNOA into net operating profit margin (NOPM) and net oper- ating asset turnover (NOAT) for 2016; confirm that RNOA = NOPM X NOAT. d. Compute net nonoperating obligations (NNO) for 2016 and 2015. Confirm the relation: NOA NNO + Total equity. e. Compute return on equity (ROE) for 2016. f. Infer the nonoperating return component of ROE for 2016. g. Comment on the difference between ROE and RNOA. What does this relation suggest about Cost- co's use of equity capital? %3D