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Compute NOPAT Selected income statement information for 2018 is presented below for Home Depot Inc. and Lowes Companies Inc. Assume the statutory tax rate is
Compute NOPAT Selected income statement information for 2018 is presented below for Home Depot Inc. and Lowes Companies Inc. Assume the statutory tax rate is 22%.
| Pretax Net | Average Net | ||||||
|---|---|---|---|---|---|---|---|
| Nonoperating | Tax | Operating | |||||
| Company ($ millions) | Ticker | Sales | NOPBT | Expense | Expense | Assets | |
| Home Depot | HD | $108,203 | $15,064 | $945 | $3,332 | $24,460 | |
| Lowes | LOW | 69,170 | 3,897 | 605 | 1,080 | 20,326 |
a. Compute the following measures for both companies.
| Measure | Rounding Instructions | Home Depot | Lowes | |
|---|---|---|---|---|
| 1. | Net operating profit (NOPAT) | Round to nearest whole dollar | $........ | $........ |
| 2. | Return on net operating assets (RNOA) | Round percentage to one decimal place | .........% | ........% |
| 3. | Net operating profit margin (NOPM) | Round percentage to one decimal place | ........% | ...........% |
| 4. | Net operating asset turnover (NOAT) | Round amount to two decimal places | ........ | ........ |
b. Indicate which of these two companies:
| 1. | Is more profitable (in $s). | Home Depot or Lowe's | |
| 2. | Produces the higher profit margin (in %). | Home Depot or Lowe's | |
| 3. | Uses its NOA more efficiently. | Home Depot or Lowe's | |
| 4. | Produces the higher return on NOA. | Home Depot or Lowe's |
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