By looking at the following results of both Nordstrom and TJ Maxx what general conclusion can be drawn:

Non-operatingreturn = FLEV Spread

2009: 1.84 10.0% = 18.4%

2008: 2.15 9.9% = 21.3% (Note the rounding difference from 21.4% in h, above)

j.

NordstromTJX

Return on equity31.7%48.3%

RNOA13.3%38.3%

NOPM6.1%6.1%

NOAT2.186.28

Nonoperatingreturn18.4%10.1%

FLEV1.840.29

Spread10.0%34.9%

Thenon-operatingreturns for the two companies differ significantly with Nordstrom'snon-operatingreturn of 18.4% nearly double that of TJX (10.1%) due to differences in the degree of financial leverage between the two companies. Nordstrom's FLEV of 1.84 is about six times as high as TJX's at 0.29. TJX has very little debt whereas Nordstrom has significant short and long-term debt levels. Both companies have the same level ofnon-operatingexpenses tonon-operatingobligations (3.3% at Nordstrom and 3.4% at TJX), which implies that the two companies have the same cost of debt capital. But TJX does not borrow much and, thus, does not earn a significantnon-operatingreturn for its shareholders.