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 Jan. 28, 2012 Jan. 29, 2011 Net sales $14,649 $14,664 Cost of goods sold and occupancy expenses 9,275 8,775 Gross profit 5,374 5,889 Operating expenses 3,836 3,921 Operating income 1,538 1,968 Interest expense (reversal) 74 (8) Interest income (5) (6) Income before income taxes 1,469 1,982 Income taxes 536 778 Net earnings $933 $1,204 The GAP, INC. Selected Balance Sheet Data Jan. 28, 2012 Jan. 29, 2011 Merchandise inventories $1,415 $1,620 Total assets 7,222 7,065 Total stockholders' equity 2,755 4,080 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 January 28, 2012. (Round your answers to one decimal place.) ROE 27.3 % ROA ROFL % X % x a. Compute the return on equity (ROE), return on assets (ROA), and return on financial leverage (ROFL) for the fiscal year ended January 28, 2012. (Round your answers to one decimal place.) ROE ROA 27.3% % x ROFL % x b. Disaggregate ROA into profit margin (PM) and asset turnover (AT). (Round your answers to one decimal place.) PM %1x AT 2.1 c. Compute the gross profit margin (GPM) and inventory turnover (INVT) ratios for the fiscal year ended January 28, 2012. (Round your answers to one decimal place.) GPM 36.7 % INVT 6.1 Check C