Compute and Interpret Ratios

Selected balance sheet and income statement information from Illinois Tool Works follows.

$ millions	2019	2018	2017
Net operating profit after tax (NOPAT)	$2,610	$2,711
Net income	2,521	2,563
Total assets	15,068	14,870	$16,780
Equity	3,026	3,254	3,254
Net operating profit after tax (NOA)	8,869	9,462	10,089
Treasury stock	18,982	17,545	15,562

a. Compute profitability measures: RNOA, ROA and ROE for 2019 and 2018 using the numbers as reported by the company.

Note: Round answers to one decimal place (ex: 0.2345 = 23.5%).

Metric	2019	2018
RNOA	Answer 1	Answer 2
ROA	Answer 3	Answer 4
ROE	Answer 5	Answer 6

b. Adjust equity and total assets for the amount of treasury stock.

$ millions	2019	2018	2017
Assets, restated	Answer 7	Answer 8	Answer 9
Equity, restated	Answer 10	Answer 11	Answer 12

Using these restated numbers, recompute RNOA, ROA and ROE for both years. Note: Round answers to one decimal place (ex: 0.2345 = 23.5%).

Metric	2019	2018
RNOA	Answer 13	Answer 14
ROA	Answer 15	Answer 16
ROE	Answer 17	Answer 18

c. Which profitability measures (from part a or part b) better reflect the company's profit levels during the two years? Answer 19part a. - using reported numberspart b. - using restated numbers

Of the three measures, which one is least influenced by the company's stock repurchase activity? Answer 20ROAROERNOA