Question 4 has seven parts (i.e., a, b, c, d, e, f, and g). Please provide a step-by-step explanation using either an Excel spreadsheet and or accounting formulas. Thanks!
Analysis and Interpretation of Protability Balance sheets and income statements for Costco Wholesale Corporation follow. Costco Wholesale Corporation Consolidated Statements of Earnings For Fiscal Tears Ended :5 millions} August 23. 21316 August an. 21:15 August 31. 21314 Revenue Net Sales $116,933 $113,666 $110,212 Membership fees 2,646 2,533 2,423 Total revenue 113,?19 116,199 112,649 Operating expenses Merchandise costs 102,9[11 101,065 93,453 Selling. general and administrative l2,DEB \Costco Wholesale Corporation Consolidated Balance Sheets ($ millions, except par value and share data) August 28, 2016 August 30, 2015 Assets Current assets Cash and cash equivalents $3,379 $4,801 Short-term investments 1,350 1,618 Receivables, net 1,252 1,224 Merchandise inventories 8,969 8,908 Deferred income taxes and other current assets 268 228 Total current assets 15,218 16,779 Property and equipment Land 5,395 4,961 Buildings and improvements 13,994 12,618 Equipment and fixtures 6,077 5,274 Construction in progress 701 811 Gross property and equipment 26,167 23,664 Less accumulated depreciation and amortization (9,124) (8,263) Net property and equipment 17,043 15,401 Other assets 902 337 Total assets $33,163 $33,017 Liabilities and equity Current liabilities Accounts payable $7,612 $9,011 Current portion long-term debt $1,100 $1,283 Accrued salaries and benefits 2,629 2,468 Accrued member rewards 869 813 Deferred membership fees 1,362 1,269 Other current liabilities 2,003 1,695 Total current liabilities 15,575 16,539Other assets 902 837 Total assets $33,163 $33,017 Liabilities and equity Current liabilities Accounts payable $7,612 $9,011 Current portion long-term debt $1,100 $1,283 Accrued salaries and benefits 2,629 2,468 Accrued member rewards 869 813 Deferred membership fees 1,362 1,269 Other current liabilities 2,003 1,695 Total current liabilities 15,575 16,539 Long-term debt, excluding current portion 4,061 4,852 Other liabilities 1,195 783 Total liabilities 20,831 22,174 Equity Preferred stock, $0.005 par value: 100,000,000 shares authorized; no shares issued and outstanding 0 0 Common stock, $0.005 par value: 900,000,000 shares authorized; 437,524,000 and 437,952,000 shares issued and outstanding 2 2 Additional paid-in-capital 5,490 5,218 Accumulated other comprehensive loss (1,099) (1,121) Retained earnings 7,686 6,518 Total Costco stockholders' equity 12,079 10,617 Noncontrolling interests 253 226 Total equity 12,332 10,843 Total liabilities and equity $33,163 $33,017HINT: For Sales use "Total revenues" for your computations, when applicable. (a) Compute net operating profit after tax (NOPAT) for 2016. Assume that the combined federal and state statutory tax rate is 37%. (Round to the nearest whole number.) 2016 NOPAT = ($ millions) (b) Compute net operating assets (NOA) for 2016 and 2015. 2016 NOA = ($ millions) 2015 NOA = ($ millions) (c) Compute Costco's RNOA, net operating profit margin (NOPM) and net operating asset turnover (NOAT) for 2016. (Do not round until final answer. Round two decimal places. Do not use NOPM x NOAT to calculate RNOA) 2016 RNOA = 2016 NOPM = % 2016 NOAT = (d) Compute net nonoperating obligations (NNO) for 2016 and 2015. 2016 NNO = ($ millions) 2015 NNO = ($ millions) (e) Compute return on equity (ROE) for 2016. (Do not round until final answer. Round answer two decimal places) 2016 ROE = %(e) Compute return on equity (ROE) for 2016. (Do not round until final answer. Round answer two decimal places) 2016 ROE = % (f) Infer the nonoperating return component of ROE for 2016. (Use answers from above to calculate. Round two decimal places.) % (g) What does the relation between ROE and RNOA suggest about Costco's use of equity capital? CROE > RNOA implies that Costco's equity has grown faster than its NOA. CROE > RNOA implies that Costco has taken on too much financial leverage. CROE > RNOA implies that Costco is able to borrow money to fund operating assets that yield a return greater than its cost of debt. CROE > RNOA implies that Costco increased its financial leverage during the period
