1. Compute ROE for all three years reported on the income statement. (Hint: Do the companies report noncontrolling interest on the income statement and balance sheet? If so, make certain to use income available to the controlling interest (NICI) in the numerator and equity of the controlling interest (CI) in the denominator. To compute ROE for three years, we must determine average stockholders' equity for three years, which means we need four balance sheet amounts. Because the balance sheets of each company will report only two years, we must collect prior years' financial statements.)

The companies are Harley Davidson vs Piaggio.

Harley Davidson Balance Sheet

Breakdown 12/31/2019 12/31/2018 12/31/2017 12/31/2016

Total Assets 10,528,159 10,665,664 9,972,672 9,890,240

Current Assets 4,202,823 4,484,442 3,884,742 3,853,852

Cash, Cash Equivalents & Short Term Investments 833,868 1,213,773 687,521 765,503

Cash And Cash Equivalents 833,868 1,203,766 687,521 759,984

Other Short Term Investments 0 10,007 0 5,519

Receivables 2,531,856 2,520,898 2,435,648 2,361,367

Accounts receivable 2,531,856 2,520,898 2,435,648 2,361,367

Gross Accounts Receivable 2,735,365 - - -

Allowance For Doubtful Accounts Receivable -203,509 - - -

Inventory 603,571 556,128 538,202 499,917

Raw Materials 379,691 313,137 301,027 262,903

Finished Goods 280,306 301,630 289,530 285,281

Inventories Adjustments Allowances -56,426 -58,639 -52,355 -48,267

Restricted Cash 64,554 49,275 47,518 52,574

Current Deferred Assets - - - 0

Current Deferred Taxes Assets - - - 0

Other Current Assets 168,974 144,368 175,853 174,491

Total non-current assets 6,325,336 6,181,222 6,087,930 6,036,388

Net PPE 909,000 904,132 967,781 981,593

Gross PPE 3,153,959 3,236,361 3,285,322 3,261,525

Properties 0 0 0 0

Land And Improvements 75,798 73,025 70,256 65,533

Buildings And Improvements 507,178 483,965 464,454 464,200

Machinery Furniture Equipment 2,360,560 2,473,585 2,550,216 2,517,383

Other Properties 61,618 - - -

Construction in Progress 148,805 205,786 200,396 214,409

Accumulated Depreciation -2,244,959 -2,332,229 -2,317,541 -2,279,932

Goodwill And Other Intangible Assets 74,757 61,046 55,947 53,391

Goodwill 64,160 55,048 55,947 53,391

Other Intangible Assets 10,597 5,998 - -

Non Current Accounts Receivable 5,101,844 5,007,507 4,859,424 4,759,197

Non Current Deferred Assets 101,204 141,464 109,073 167,729

Non Current Deferred Taxes Assets 101,204 141,464 109,073 167,729

Defined Pension Benefit 56,014 0 19,816 -

Other Non Current Assets 82,517 67,073 75,889 74,478

Total Liabilities Net Minority Interest 8,724,160 8,891,715 8,128,395 7,970,082

Current Liabilities 3,196,772 3,597,600 3,158,170 2,862,562

Payables And Accrued Expenses 842,854 852,177 736,111 721,970

Payables 324,251 327,944 253,541 261,458

Accounts Payable 294,380 284,861 227,597 235,318

Total Tax Payable 29,871 43,083 25,944 26,140

Current Accrued Expenses 518,603 524,233 482,570 460,512

Interest Payable 49,213 47,977 40,347 42,788

Current Provisions 867 28,498 - -

Current Debt And Capital Lease Obligation 2,339,117 2,711,609 2,400,751 2,140,592

Current Debt 2,320,104 2,711,609 2,400,751 2,140,592

Commercial Paper 571,995 1,135,810 1,273,482 1,055,708

Other Current Borrowings 1,748,109 1,575,799 1,127,269 1,084,884

Current Capital Lease Obligation 19,013 - - -

Other Current Liabilities 13,934 5,316 21,308 -

Total Non Current Liabilities Net Minority Interest 5,527,388 5,294,115 4,970,225 5,107,520

Long Term Debt And Capital Lease Obligation 5,169,273 4,887,667 4,587,258 4,666,975

Long Term Debt 5,124,826 4,887,667 4,587,258 4,666,975

Long Term Capital Lease Obligation 44,447 - - -

Non Current Deferred Liabilities 8,135 - - -

Non Current Deferred Taxes Liabilities 8,135 - - -

Employee Benefits 128,651 202,229 173,359 257,709

Non Current Pension And Other Post-Retirement Benefit Plans 128,651 202,229 173,359 257,709

Other Non Current Liabilities 221,329 204,219 209,608 182,836

Total Equity Gross Minority Interest 1,803,999 1,773,949 1,844,277 1,920,158

Stockholders' Equity 1,803,999 1,773,949 1,844,277 1,920,158

Capital Stock 1,828 1,819 1,813 1,806

Preferred Stock 0 0 0 0

Common Stock 1,828 1,819 1,813 1,806

Additional Paid in Capital 1,491,004 1,459,620 1,422,808 1,381,862

Retained Earnings 2,193,997 2,007,583 1,607,570 1,337,673

Treasury Stock 1,345,881 1,065,389 687,865 235,802

Gains Losses Not Affecting Retained Earnings -536,949 -629,684 -500,049 -565,381

Total Capitalization 6,928,825 6,661,616 6,431,535 6,587,133

Common Stock Equity 1,803,999 1,773,949 1,844,277 1,920,158

Capital Lease Obligations 63,460 - - -

Net Tangible Assets 1,729,242 1,712,903 1,788,330 1,866,767

Working Capital 1,006,051 886,842 726,572 991,290

Invested Capital 9,248,929 9,373,225 8,832,286 8,727,725

Tangible Book Value 1,729,242 1,712,903 1,788,330 1,866,767

Total Debt 7,508,390 7,599,276 6,988,009 6,807,567

Net Debt 6,611,062 6,395,510 6,300,488 6,047,583

Share Issued 182,817 181,931 181,287 180,595

Ordinary Shares Number 152,468 159,658 168,091 175,948

Treasury Shares Number 30,348 22,273 13,196 4,647

Piaggio Balance Sheet

Breakdown 12/31/2019 12/31/2018 12/31/2017 12/31/2016

Total Assets 1,626,388 1,585,677 1,510,128 1,630,715

Current Assets 537,656 543,085 471,027 533,385

Cash, Cash Equivalents & Short Term Investments 190,746 188,740 128,067 191,757

Cash And Cash Equivalents 190,746 188,740 128,067 191,757

Cash 128,630 131,344 88,743 166,163

Cash Equivalents 62,116 57,396 39,324 25,594

Inventory 212,887 223,962 218,427 208,310

Raw Materials 100,525 94,099 90,509 84,673

Work in Process 18,315 17,771 17,389 15,772

Finished Goods 94,047 112,092 110,529 107,865

Inventories Adjustments Allowances - -31,749 -38,319 -37,381

Prepaid Assets 5,785 5,167 6,024 3,320

Current Deferred Assets 4,219 2,880 3,516 3,790

Hedging Assets Current 3,912 2,809 2,423 7,470

Total non-current assets 1,088,732 1,042,592 1,039,101 1,097,330

Net PPE 299,982 266,198 273,013 301,079

Gross PPE 1,312,457 1,269,516 1,246,627 1,253,298

Properties 0 0 0 0

Land And Improvements 35,216 27,640 27,640 28,083

Buildings And Improvements 186,267 169,761 167,730 169,539

Machinery Furniture Equipment 1,001,783 999,664 984,156 987,877

Other Properties 59,450 54,308 52,353 50,630

Construction in Progress 29,741 18,143 14,748 17,169

Accumulated Depreciation -1,012,475 -1,003,318 -973,614 -952,219

Goodwill And Other Intangible Assets 676,183 658,888 648,977 668,665

Goodwill 446,940 446,940 446,940 446,940

Other Intangible Assets 229,243 211,948 202,037 221,725

Investment Properties 9,203 10,269 11,523 11,710

Financial Assets 3,475 5,992 7,328 19,173

Total Liabilities Net Minority Interest 1,242,581 1,193,725 1,125,068 1,237,001

Current Liabilities 693,686 621,672 616,241 633,041

Current Provisions 14,452 12,593 10,077 8,883

Current Debt And Capital Lease Obligation 143,441 131,990 137,780 166,371

Current Debt 135,033 130,846 136,636 165,257

Current Capital Lease Obligation 8,408 1,144 1,144 1,114

Other Current Liabilities - -18,488 - -

Total Non Current Liabilities Net Minority Interest 548,895 572,053 508,827 603,960

Long Term Provisions 12,116 9,504 9,096 10,566

Long Term Debt And Capital Lease Obligation 483,583 439,363 446,483 516,342

Long Term Debt 463,587 430,195 437,315 506,031

Long Term Capital Lease Obligation 19,996 9,168 9,168 10,311

Tradeand Other Payables Non Current 3,317 2,826 2,857 2,888

Non Current Accrued Expenses 471 - - -

Derivative Product Liabilities - 73,135 0 18,763

Total Equity Gross Minority Interest 383,807 391,952 385,060 393,714

Stockholders' Equity 384,015 392,163 385,296 394,019

Capital Stock 207,614 - - -

Common Stock 207,614 - - -

Additional Paid in Capital 7,171 - - -

Treasury Stock 1,749 - - -

Minority Interest -208 -211 -236 -305

Total Capitalization 847,602 822,358 822,611 900,050

Common Stock Equity 384,015 392,163 385,296 394,019

Capital Lease Obligations 28,404 10,312 10,312 11,425

Net Tangible Assets -292,168 -266,725 -263,681 -274,646

Working Capital -156,030 -78,587 -145,214 -99,656

Invested Capital 982,635 953,204 959,247 1,065,307

Tangible Book Value -292,168 -266,725 -263,681 -274,646

Total Debt 627,024 571,353 584,263 682,713

Net Debt 407,874 372,301 445,884 479,531

Share Issued 358,154 358,154 358,154 361,208

Ordinary Shares Number 357,255 357,360 358,154 358,154

Treasury Shares Number 898.818 793.818 - 3,055

Piaggio Income Statement

Breakdown 12/31/2019 12/31/2018 12/31/2017 12/31/2016

Total Revenue 1,564,470 1,430,724 1,383,912 1,356,956

Operating Revenue 1,564,470 1,430,724 1,383,912 1,356,956

Cost of Revenue 1,166,597 1,061,244 1,018,604 1,017,681

Gross Profit 397,873 369,480 365,308 339,275

Operating Expense 308,750 290,319 292,149 282,291

Other Operating Expenses 18,877 18,543 19,188 18,532

Operating Income 89,123 79,161 73,159 56,984

Net Non Operating Interest Income Expense -24,698 -25,603 -33,799 -35,929

Interest Income Non Operating 3,353 2,674 1,129 769

Interest Expense Non Operating 25,867 31,213 32,528 34,385

Total Other Finance Cost 2,184 -2,936 2,400 2,313

Pretax Income 80,684 67,850 40,055 25,503

Tax Provision 33,935 31,775 20,071 11,463

Net Income Common Stockholders 46,749 36,075 19,984 14,040

Net Income 46,749 36,075 19,984 14,040

Net Income Including Non-Controlling Interests 46,749 36,075 19,984 14,040

Net Income Continuous Operations 46,749 36,075 19,984 14,040

Minority Interests 0 0 0 0

Other under Preferred Stock Dividend 0 0 0 0

Diluted NI Available to Com Stockholders 46,749 36,075 19,984 14,040

Basic EPS 0 0 0 0

Diluted EPS 0 0 0 0

Basic Average Shares 357,274 357,916 358,154 358,785

Diluted Average Shares 357,274 357,916 358,154 358,785

Total Operating Income as Reported 104,546 92,778 72,329 60,905

Rent Expense Supplemental 10,731 17,451 17,384 16,698

Total Expenses 1,475,347 1,351,563 1,310,753 1,299,972

Net Income from Continuing & Discontinued Operation 46,749 36,075 19,984 14,040

Normalized Income 51,406 39,146 23,968 13,718

Interest Income 3,353 2,674 1,129 769

Interest Expense 25,867 31,213 32,528 34,385

Net Interest Income -24,698 -25,603 -33,799 -35,929

EBIT 106,551 99,063 72,583 59,888

EBITDA - - - -

Reconciled Cost of Revenue 1,166,597 1,061,244 1,018,604 1,017,681

Reconciled Depreciation 118,651 105,934 115,773 108,459

Net Income from Continuing Operation Net Minority Interest 46,749 36,075 19,984 14,040

Total Unusual Items Excluding Goodwill -6,127 -4,041 -5,242 470

Total Unusual Items -6,127 -4,041 -5,242 470

Normalized EBITDA 231,329 209,038 193,598 167,877

Tax Rate for Calcs 0 0 0 0

Tax Effect of Unusual Items -1,470 -969.84 -1,258 147.58

Harley Davidson Income Statement

Breakdown 12/31/2019 12/31/2018 12/31/2017 12/31/2016

Total Revenue 5,361,789 5,716,875 5,647,224 5,996,458

Operating Revenue 5,361,789 5,716,875 5,647,224 5,996,458

Cost of Revenue 3,440,236 3,544,983 3,441,876 3,593,466

Gross Profit 1,921,553 2,171,892 2,205,348 2,402,992

Operating Expense 1,333,592 1,364,968 1,314,085 1,354,056

Selling General and Administrative 1,199,056 1,258,098 1,181,641 1,217,439

Provision for Doubtful Accounts 134,536 106,870 132,444 136,617

Operating Income 587,961 806,924 891,263 1,048,936

Net Non Operating Interest Income Expense -31,078 -30,884 -31,004 -29,670

Interest Expense Non Operating 31,078 30,884 31,004 29,670

Other Income Expense 532 -89,411 3,580 4,645

Gain on Sale of Security 16,371 951 3,580 4,645

Special Income Charges -32,353 -93,401 - -

Restructuring & Mergers Acquisition 32,353 93,401 - -

Other Non Operating Income Expenses 16,514 3,039 - -

Pretax Income 557,415 686,629 863,839 1,023,911

Tax Provision 133,780 155,178 342,080 331,747

Net Income Common Stockholders 423,635 531,451 521,759 692,164

Net Income 423,635 531,451 521,759 692,164

Net Income Including Non-Controlling Interests 423,635 531,451 521,759 692,164

Net Income Continuous Operations 423,635 531,451 521,759 692,164

Diluted NI Available to Com Stockholders 423,635 531,451 521,759 692,164

Basic EPS 0.0027 0.0032 0.003 0.0039

Diluted EPS 0.0027 0.0032 0.003 0.0038

Basic Average Shares 157,054 165,672 171,995 179,676

Diluted Average Shares 157,804 166,504 172,932 180,535

Total Operating Income as Reported 555,608 713,523 891,263 1,048,936

Total Expenses 4,773,828 4,909,951 4,755,961 4,947,522

Net Income from Continuing & Discontinued Operation 423,635 531,451 521,759 692,164

Normalized Income 435,781 603,007 519,597 689,024

Interest Expense 31,078 30,884 31,004 29,670

Net Interest Income -31,078 -30,884 -31,004 -29,670

EBIT 588,493 717,513 894,843 1,053,581

EBITDA - - - -

Reconciled Cost of Revenue 3,440,236 3,544,983 3,441,876 3,593,466

Reconciled Depreciation 232,537 264,863 222,188 209,555

Net Income from Continuing Operation Net Minority Interest 423,635 531,451 521,759 692,164

Total Unusual Items Excluding Goodwill -15,982 -92,450 3,580 4,645

Total Unusual Items -15,982 -92,450 3,580 4,645

Normalized EBITDA 837,012 1,074,826 1,113,451 1,258,491

Tax Rate for Calcs 0 0 0 0

Tax Effect of Unusual Items -3,836 -20,894 1,418 1,505