Compute the DuPont Disaggregation of ROE 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 $54,163 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 23,238 Interest and other income (expense), net 448 Income before provision for income taxes 23,686 Provision for income taxes 3,249 Net income $20,437 FACEBOOK INC. Consolidated Balance Sheet At December 31, $ millions Current assets Cash and cash equivalents Marketable securities Accounts receivable, net 2018 2017 $10,019 $8,079 31,095 33,632 7,359 5,832) Current assets Cash and cash equivalents Marketable securities $10,019 $8,079 31,095 33,632 7,359 5,832 Accounts receivable, net Prepaid expenses and other current assets 1,779 1,020 Total current assets 50,252 48,563 Property and equipment, net 24,683 13,721 Intangible assets, net 1,294 1,884 Goodwill 18,301 18,221 Other assets Total assets Current liabilities $2,576 $2,135 $97,106 $84,524 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 13,207 10,177 Total liabilities Stockholders' equity Common stock and additional paid-in capital 42,906 40,584 Accumulated other comprehensive loss Retained earnings Total stockholders' equity (760) (227) 41,753 33,990 83,899 74,347 Total liabilities and stockholders' equity $97,106 $84,524 a. Compute return on equity (ROE). Note: Round percentage to one decimal place (for example, enter 6.7 % for 6.6555 %). 54.9 * % b. Apply the DuPont disaggregation into return on assets (ROA) and financial leverage. Note: For FL, round amount to three decimal places (for example, enter 6.776 for 6.77555). Note: For ROA and ROE, round percentages to one decimal place (for example, enter 6.7 % for 6.6555 %). x FL ROA 22.5 % x ROE 1.148 25.83 % c. Calculate the profitability and productivity components of ROA Note: For AT, round amount to three decimal places (for example, enter 6.776 for 6.77555). Note: For PM and ROA, round percentages to one decimal place (for example, enter 6.7% for 6.6555%). PM AT 37.7% x ROA 59.641 x 2.248.5 % x d. Confirm the full DuPont disaggregation: ROE PM AT FL. Note: For AT and FL, round amounts to three decimal places (for example, enter 6.776 for 6.77555). Note: For PM and ROE, round percentages to one decimal place (for example, enter 6.7% for 6.6555%). Note: For PM and ROA, round percentages to one decimal place (for example, enter 6.7% for 6.6555%). AT PM 37.7% x ROA 59.641 x 2,248.5 % x d. Confirm the full DuPont disaggregation: ROE = PM ATX FL. Note: For AT and FL, round amounts to three decimal places (for example, enter 6.776 for 6.77555). Note: For PM and ROE, round percentages to one decimal place (for example, enter 6.7% for 6.6555%). PM AT x FL ROE 37.7% x 59.641 x 1.148 = 2,581.2% x Previous