Required

a. Compute net operating profit after tax (NOPAT) for 2016. Assume that the combined federal and

state statutory tax rate is 37%.

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

c. Compute and disaggregate Costcos RNOA into net operating profit margin (NOPM) and net oper-

ating asset turnover (NOAT) for 2016; confirm that RNOA 5 NOPM 3 NOAT.

d. Compute net nonoperating obligations (NNO) for 2016 and 2015. Confirm the relation: NOA 5

NNO 1 Total equity.

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

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

g. Comment on the difference between ROE and RNOA. What does this relation suggest about Cost-

cos use of equity capital?