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Balance sheets and income statements for Costco Wholesale Corporation follow. Costco Wholesale Corporation Consolidated Statements of Earnings For Fiscal Years Ended ( $ millions )

Balance sheets and income statements for Costco Wholesale Corporation follow.
Costco Wholesale Corporation
Consolidated Statements of Earnings
For Fiscal Years Ended ($ millions) September 2,2018
Total revenue $141,576
Operating expenses
Merchandise costs 123,152
Selling, general and administrative 13,876
Preopening expenses 68
Operating Income 4,480
Other (income) expense
Interest expense 159
Interest income and other, net (121)
Income before income taxes 4,442
Provision for income taxes 1,263
Net income including noncontrolling interests 3,179
Net income attributable to noncontrolling interests (45)
Net income attributable to Costco $3,134
Costco Wholesale Corporation
Consolidated Balance Sheets
($ millions, except par value and share data) September 2,2018 September 3,2017
Current assets
Cash and cash equivalents $6,055 $4,546
Short-term investments 1,2041,233
Receivables, net 1,6691,432
Merchandise inventories 11,0409,834
Other current assets 321272
Total current assets 20,28917,317
Net property and equipment 19,68118,161
Other assets 860869
Total assets $40,830 $36,347
Current liabilities
Accounts payable $11,237 $9,608
Accrued salaries and benefits 2,9942,703
Accrued member rewards 1,057961
Deferred membership fees 1,6241,498
Other current liabilities 3,0142,725
Total current liabilities 19,92617,495
Long-term debt 6,4876,573
Other liabilities 1,3141,200
Total liabilities 27,72725,268
Equity
Preferred stock, $0.01 par value: 00
Common stock, $0.01 par value: 44
Additional paid-in-capital 6,1075,800
Accumulated other comprehensive loss (1,199)(1,014)
Retained earnings 7,8875,988
Total Costco stockholders equity 12,79910,778
Noncontrolling interests 304301
Total equity 13,10311,079
Total liabilities and equity $40,830 $36,347
Combined federal and state statutory tax rate 22.00%
ROE 26.59%
RNOA 26.51%
a. Compute net nonoperating expense (NNE) and net operating profit after tax (NOPAT).
NNE
Answer 1
38
NOPAT
Answer 2
3,494
b. Compute net nonoperating obligations (NNO) for 2018 and 2017.
Year NNO
2018 Answer 3
794
2017 Answer 4
(772)
c. Compute financial leverage (FLEV).
Numerator Denominator FLEV
Answer 5
Average net nonoperating obligations (NNO)
Answer 6
Average equity
Answer 7
40,830
Answer 8
6,487
6
d. Compute NNEP and Spread.
Numerator Denominator NNEP
Answer 9
Net nonoperating expense (NNE)
Answer 10
Average net nonoperating obligations (NNO)
Answer 11
360.4
Answer 12
993
36.29
RNOA (given) NNEP Spread
Answer 13
26.52
Answer 14
36.29
(9.77)
e. Compute the noncontrolling interest ratio (NCI ratio).`
Numerator Denominator NCI ratio
Answer 15
3,134
Answer 16
0.2659
11,786.39
f. Confirm the relation: ROE =[RNOA +(FLEV \times Spread)]\times NCI ratio.
Ratio Number
ROE (given) Answer 17
26.59
RNOA (given) Answer 18
26.51
FLEV Answer 19
6.29
Spread Answer 20
9.77
NCI ratio Answer 21
36.29
ROE
3,192.19
***ROE may be different due to rounding
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