Reformulating Financial Analysis for Equity Method Investments Cummins Inc. reports investments in affiliated companies, consisting mainly of investments in six manufacturing joint ventures. Cummins provides the following financial information on its investee companies in a footnote to its 10-K report. Equity Investee Financial Summary As of and for the years ended Dec. 31 $ millions 2018 2017 2016 Net sales $7,352 $7,050 $5,654 Gross margin 1,373 1,422 1,182 Net income 647 680 499 Cummins' share of net income $336 $308 $260 Royalty and interest income Total equity, royalty and interest from investees $394 $357 $301 Current assets $3,401 $3,416 Noncurrent assets 1,449 1,379 Current liabilities (2,669) (2,567) Noncurrent liabilities (218) (237) Net assets $1,963 $1,991 Cummins' share of net assets $1,144 $1,116 58 49 41 Make the following assumptions about the above data. All assets are operating assets. All current liabilities are operating liabilities. Non-current liabilities are loans that bear interest at 8%. EMI (Equity Method Investments) investees' tax rate is 22%. The following information is derived from the 2018 form 10-K for Cummins Inc., the investor company. $ millions Revenue $23,771 Net operating profit after tax (NOPAT) 2,213 Net nonoperating expense (NNE) Net income attributable to Cummins Inc. 2,141 Net operating assets (NOA) 9,210 Net nonoperating obligations (NNO) Equity of Cummins Inc. shareholders 7,348 26 951