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Analysis and Interpretation of Profitability

Balance sheets and income statements for Nordstrom, Inc., follow. Refer to these financial statements to answer the requirements.

Nordstrom, Inc.

Consolidated Statements of EarningsFor Fiscal Years Ended ($ millions)201620152014Net Sales$14,095$13,110$12,166Credit card revenues342396374Total revenues14,43713,50612,540Cost of sales and related buying and occupancy costs(9,168)(8,406)(7,737)Selling, general and administrative expenses(4,168)(3,777)(3,453)Earnings before interest and income taxes1,1011,3231,350Interest expense, net(125)(138)(161)Earnings before income taxes9761,1851,189Income tax expense(376)(465)(455)Net earnings$600$720$734

Nordstrom, Inc.

Consolidated Balance Sheetsin millionsJan. 30, 2016Jan. 31, 2015AssetsCurrent assetsCash and cash equivalents$595$827Accounts receivable, net1962,306Merchandise inventories1,9451,733Current deferred tax assets, net0256Prepaid expenses and other278102Total current assets3,0145,224Land, buildings and equipment, net3,7353,340Goodwill435435Other assets514246Total assets$7,698$9,245Liabilities and equityCurrent liabilitiesAccounts payable$1,324$1,328Accrued salaries, wages and related benefits416416Other current liabilities1,1611,048Current portion of long-term debt108Total current liabilities2,9112,800Long-term debt, net2,7953,123Deferred income taxes and other liabilities540510Other liabilities581372Shareholders' equityCommon stock, no par value: 1,000 shares authorized;173.5 and 190.1 shares issued and outstanding2,5392,338Retained earnings(1,610)166Accumulated other comprehensive loss(58)(64)Total shareholders' equity8712,440Total liabilities and shareholders' equity$7,698$9,245

HINT: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 = $Answer

(b) Compute net operating assets (NOA) for 2016 and 2015.

2016 NOA = $Answer

2015 NOA = $Answer

(c) Compute RNOA, net operating profit margin (NOPM) and net operating asset turnover (NOAT) for 2016.

Do not round until your final answer. Round answer to two decimal places.

2016 RNOA =Answer

%

2016 NOPM =Answer

%

2016 NOAT =Answer

(d) Compute net nonoperating obligations (NNO) for 2016 and 2015.

2016 NNO = $Answer

2015 NNO = $Answer

(e) Compute return on equity (ROE) for 2016.

Round answer to two decimal places.

2016 ROE =Answer

%

(f) Infer the nonoperating return component of ROE for 2016.

Use above answers to calculate. Round answer to two decimal places.

2016 nonoperating return =Answer

%