Question
Compute ROE and Nonoperating Return with Negative NNO and No Noncontrolling Interest Refer to the balance sheets and income statement below for Facebook Inc. FACEBOOK
Compute ROE and Nonoperating Return with Negative NNO and No Noncontrolling Interest Refer to the balance sheets and income statement below for Facebook Inc.
FACEBOOK INC. | |
---|---|
Consolidated Statement of Income | |
For Year Ended December 31, $ millions | 2018 |
Revenue | $57,513 |
Costs and expenses | |
Cost of revenue | 9,355 |
Research and development | 10,273 |
Marketing and sales | 7,846 |
General and administrative | 3,451 |
Total costs and expenses | 30,925 |
Income from operations | 26,588 |
Interest and other income (expense), net | 448 |
Income before provision for income taxes | 27,036 |
Provision for income taxes | 3,249 |
Net income | $23,787 |
FACEBOOK INC. | ||
---|---|---|
Consolidated Balance Sheet | ||
At December 31, $ millions | 2018 | 2017 |
Current assets | ||
Cash and cash equivalents | $10,019 | $8,079 |
Marketable securities | 31,095 | 33,632 |
Accounts receivable, net | 7,815 | 5,832 |
Prepaid expenses and other current assets | 1,779 | 1,020 |
Total current assets | 50,708 | 48,563 |
Property and equipment, net | 24,683 | 13,721 |
Intangible assets, net | 1,294 | 1,884 |
Goodwill | 18,301 | 18,221 |
Other assets | $2,576 | $2,135 |
Total assets | $97,562 | $84,524 |
Current liabilities | ||
Accounts payable | $820 | $380 |
Partners payable | 541 | 390 |
Accrued expenses and other current liabilities | 5,509 | 2,892 |
Deferred revenue and deposits | 147 | 98 |
Total current liabilities | 7,017 | 3,760 |
Other liabilities | 6,190 | 6,417 |
Total liabilities | 13,207 | 10,177 |
Stockholders' equity | ||
Common stock and additional paid-in capital | 42,906 | 40,584 |
Accumulated other comprehensive loss | (760) | (227) |
Retained earnings | 42,209 | 33,990 |
Total stockholders' equity | 84,355 | 74,347 |
Total liabilities and stockholders' equity | $97,562 | $84,524 |
Use these financial statements to answer the requirements.
Required For the 2018 fiscal year, Facebook had a return on net operating assets (RNOA) of 61.78%. a. Compute ROE. Note: Round percentage to two decimal places (for example, enter 6.66% for 6.6555%). Answer
% b. Compute net nonoperating obligations (NNO) for 2018 and 2017, net nonoperating expense (NNE), and the NNE as a percentage of NNO (NNEP), assuming a 22% statutory tax rate. Note: Round NNEP percentage to two decimal places (for example, enter 6.66% for 6.6555%). 2018 NNO: $Answer
million 2017 NNO: $Answer
million 2018 NNE: $Answer
million 2018 NNEP: Answer
% c. Compute FLEV and Spread. Note: For FLEV, round amount to four decimal places (for example, enter 6.7756 for 6.775555). Note: Round Spread percentage to two decimal places (for example, enter 6.66% for 6.6555%). 2018 FLEV: Answer
2018: Spread: Answer
% d. Show that ROE = RNOA + (FLEV Spread). Note: For FLEV, round amount to four decimal places (for example, enter 6.7756 for 6.775555). Note: For RNOA, Spread, and ROE, round percentages to two decimal places (for example, enter 6.66% for 6.6555%).
RNOA | + ( | FLEV | x | Spread | = | ROE |
Answer | + ( | Answer | x | Answer | ) = | Answer |
e. What is the nonoperating return for the year? Note: Round Spread percentage to two decimal places (for example, enter 6.66% for 6.6555%).
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