Identifying Operating and Nonrecurring Income Components Following is the The Dow Chemical Company income statement. ($ millions) For Year Ended December 31 2014 2013 Net sales $55,174 $46,175 Cost of sales 45,780 39,148 Research and development expenses 1,660 1,492 Selling, general, and administrative expenses 2,609 2,487 Amortization of intangibles 509 399 Goodwill and other intangible asset impairment losses 7 Restructuring charges (credits) 26 689 Asbestos-related charge 54 Equity in earnings of nonconsolidated affiliates 1,112 630 Sundry income (expense)-net 125 891 Interest income 37 39 Interest expense and amortization of debt discount 1,473 1,571 Income before income taxes 4,302 1,769 Provision for income taxes 481 (97) Net income $3,821 $1,976 - Required a. Identify the components in its statement that you would consider operating. b. Identify those components that you would consider nonrecurring. ($ millions) For Year Ended a. b. Nonrecurring? Operating? December 31 2014 2013 $55,174 $46,175 45,780 39,148 1,660 1,492 2,609 2,487 509 399 - 7 26 689 Net sales Cost of sales Research and development expenses Selling general, and administrative expenses Amortization of intangibles Goodwill and other intangible asset impairment losses Restructuring charges (credits) Asbestos-related charge Equity in earnings of nonconsolidated affiliates Sundry income (expense)-net Interest income Interest expense and amortization of debt discount Income before income taxes Provision for income taxes 54 1,112 125 37 630 891 39 1,571 1,769 1,473 4,302 481 (97) Net income $3,821 $1,976 Net income $3,821 $1,976 Required a. Identify the components in its statement that you would consider operating. b. Identify those components that you would consider nonrecurring. ($ millions) For Year Ended a. b. Nonrecurring? Operating? December 31 2014 2013 $55,174 $46,175 45,780 39,148 1,660 1,492 2,609 2,487 509 399 7 26 689 Net sales Cost of sales Research and development expenses Selling, general, and administrative expenses Amortization of intangibles Goodwill and other intangible asset impairment losses Restructuring charges (credits) Asbestos-related charge Equity in earnings of nonconsolidated affiliates Sundry income (expense)-net Interest income Interest expense and amortization of debt discount Income before income taxes Provision for income taxes 54 1,112 630 125 891 37 1,473 4,302 481 39 1,571 1,769 (97) $1,976 Net income $3,821 C. Compute net operating profit after taxes (NOPAT) and net operating profit margin (NOPM) for each year. Assume a statutory tax rate of 35%. 2014 2013 $ NOPAT (Round your answer to the nearest million dollar.) $ NOPM (Round your answer to one decimal place.) % %
