Income statements and balance sheets follow for Microsoft Corporation. Refer to these financial statements to answer the requirements.

Microsoft Corporation Income Statements
	Year ended June 30,
(in millions)	2013	2012
Revenue	$77,849	$73,723
Cost of revenue	20,249	17,530
Gross profit	57,600	56,193
Research and development	10,411	9,811
Sales and marketing	15,276	13,857
General and administrative	5,149	4,569
Goodwill impairment	0	6,193
Total operating expenses	30,836	34,430
Operating income	26,764	21,763
Other income	288	504
Income before income taxes	27,052	22,267
Provision for income taxes	5,189	5,289
Net income	$21,863	$16,978

Microsoft Corporation Balance Sheets
	As of June 30,
($ millions)	2013	2012
Cash and cash equivalents	$ 3,804	$ 6,938
Short-term investments	73,218	56,102
Accounts receivable, net	17,486	15,780
Inventories	1,938	1,137
Deferred income taxes	1,632	2,035
Other current assets	3,388	3,092
Total current assets	101,466	85,084
Property plant and equipment, net	9,991	8,269
Equity and other investments	10,844	9,776
Goodwill	14,655	13,452
Intangible assets, net	3,083	3,170
Other long-term assets	2,392	1,520
Total assets	$142,431	$121,271

Microsoft Corporation Balance Sheets (continued)
	As of June 30,
($ millions)	2013	2012
Accounts payable	$ 4,828	$ 4,175
Short-term debt	2,999	1,231
Accrued compensation	4,117	3,875
Income taxes	592	789
Short-term unearned revenue	20,639	18,653
Securities lending payable	645	814
Other	3,597	3,151
Current liabilities	37,417	32,688
Long-term debt	12,601	10,713
Long-term unearned revenue	1,760	1,406
Deferred income taxes	1,709	1,893
Other long-term liabilities	10,000	8,208
Total liabilities	63,487	54,908
Common stock and paid-in capital	67,306	65,797
Retained earnings/(deficit)	9,895	(856)
Accumulated other comprehensive income	1,743	1,422
Total equity	78,944	66,363
Total liabilities and equity	$142,431	$ 121,271

Required:

Income statements and balance sheets follow for Microsoft Corporation. Refer to these financial statements to answer the requirements.

Microsoft Corporation Income Statements
	Year ended June 30,
(in millions)	2013	2012
Revenue	$77,849	$73,723
Cost of revenue	20,249	17,530
Gross profit	57,600	56,193
Research and development	10,411	9,811
Sales and marketing	15,276	13,857
General and administrative	5,149	4,569
Goodwill impairment	0	6,193
Total operating expenses	30,836	34,430
Operating income	26,764	21,763
Other income	288	504
Income before income taxes	27,052	22,267
Provision for income taxes	5,189	5,289
Net income	$21,863	$16,978

Microsoft Corporation Balance Sheets
	As of June 30,
($ millions)	2013	2012
Cash and cash equivalents	$ 3,804	$ 6,938
Short-term investments	73,218	56,102
Accounts receivable, net	17,486	15,780
Inventories	1,938	1,137
Deferred income taxes	1,632	2,035
Other current assets	3,388	3,092
Total current assets	101,466	85,084
Property plant and equipment, net	9,991	8,269
Equity and other investments	10,844	9,776
Goodwill	14,655	13,452
Intangible assets, net	3,083	3,170
Other long-term assets	2,392	1,520
Total assets	$142,431	$121,271

Microsoft Corporation Balance Sheets (continued)
	As of June 30,
($ millions)	2013	2012
Accounts payable	$ 4,828	$ 4,175
Short-term debt	2,999	1,231
Accrued compensation	4,117	3,875
Income taxes	592	789
Short-term unearned revenue	20,639	18,653
Securities lending payable	645	814
Other	3,597	3,151
Current liabilities	37,417	32,688
Long-term debt	12,601	10,713
Long-term unearned revenue	1,760	1,406
Deferred income taxes	1,709	1,893
Other long-term liabilities	10,000	8,208
Total liabilities	63,487	54,908
Common stock and paid-in capital	67,306	65,797
Retained earnings/(deficit)	9,895	(856)
Accumulated other comprehensive income	1,743	1,422
Total equity	78,944	66,363
Total liabilities and equity	$142,431	$ 121,271

Required:

Compute net operating profit after tax (NOPAT) for 2013 and 2012. Assume that combined federal and state statutory tax rates are 37% for both years.

Compute net operating assets (NOA) for 2013 and 2012. Assume Equity and other investments are operating assets.

Compute return on net operating assets (RNOA) for 2013 and 2012. Net operating assets are $17,440 million in 2011.

Compute return on equity (ROE) for 2013 and 2012. (Stockholders equity in 2011 is $57,083 million.)

What is nonoperating return component of ROE for 2013 and 2012?

Comment on the difference between ROE and RNOA. What inference do you draw from this comparison?

Compute net operating assets (NOA) for 2013 and 2012. Assume Equity and other investments are operating assets.

Compute return on net operating assets (RNOA) for 2013 and 2012. Net operating assets are $17,440 million in 2011.

Compute return on equity (ROE) for 2013 and 2012. (Stockholders equity in 2011 is $57,083 million.)

What is nonoperating return component of ROE for 2013 and 2012?

Comment on the difference between ROE and RNOA. What inference do you draw from this comparison?