Compute, Disaggregate and Interpret ROE and ROA

Income statements for The Gap, Inc., follow, along with selected balance sheet information ($ millions).

The GAP, INC. Consolidated Statement of Earnings
Fiscal year ended	Feb. 3, 2018	Jan. 28, 2017
Net sales	$15,855	$15,516
Cost of goods sold and occupancy expenses	9,789	9,876
Gross profit	6,066	5,640
Operating expenses	4,587	4,449
Operating income	1,479	1,191
Interest expense	74	75
Interest income	(19)	(8)
Income before income taxes	1,424	1,124
Income taxes	576	448
Net earnings	$848	$676

The GAP, INC. Selected Balance Sheet Data
	Feb. 3, 2018	Jan. 28, 2017
Merchandise inventories	$1,997	$1,830
Total assets	7,989	7,610
Total stockholders equity	3,144	2,904

Assume a statutory tax rate of 35%. a. Compute the return on equity (ROE), return on assets (ROA), and return on financial leverage (ROFL) for the fiscal year ended February 3, 2018. (Round your answers to one decimal place.)

ROE	????
ROA	????
ROFL	????

b. Disaggregate ROA into profit margin (PM) and asset turnover (AT). (Round your answers to one decimal place.)

PM	???
AT	????

c. Compute the gross profit margin (GPM) and inventory turnover (INVT) ratios for the fiscal year ended February 3, 2018. (Round your answers to one decimal place.)

GPM	???
INVT	???

Compute, Disaggregate and Interpret ROE and ROA Income statements for The Gap, Inc., follow, along with selected balance sheet information ($ millions). The GAP, INC. Consolidated Statement of Earnings Fiscal year ended Feb. 3, 2018 Jan. 28, 2017 Net sales $15,855 $15,516 Cost of goods sold and occupancy expenses 9,789 9,876 Gross profit 6,066 5,640 Operating expenses 4,587 4,449 Operating income 1,479 1,191 Interest expense 74 75 Interest income (19) (8) Income before income taxes 1,424 1,124 Income taxes 576 448 Net earnings $848 $676 The GAP, INC. . Selected Balance Sheet Data Feb. 3, 2018 Jan. 28, 2017 Merchandise Inventories $1,997 $1,830 Total assets 7.989 7,610 Total stockholders' equity 3,144 2,904 Assume a statutory tax rate of 35% a. Compute the return on equity (ROE), return on assets (ROA), and return on financial leverage (ROFL) for the fiscal year ended February 3, 2018. (Round your answers to one decimal place.) ROE ROA ROFL b. Disaggregate ROA into profit margin (PM) and asset turnover (AT). (Round your answers to one decimal place.) PM AT C. Compute the gross profit margin (GPM) and inventory turnover (INVT) ratios for the fiscal year ended February 3, 2018. (Round your answers to one decimal place.) GPM INVT