Question
Selected balance sheet and income statement information from Illinois Tool Works follows. $ millions 2019 2018 2017 Net operating profit after tax (NOPAT) $2,897 $3,009
Selected balance sheet and income statement information from Illinois Tool Works follows.
$ millions | 2019 | 2018 | 2017 |
---|---|---|---|
Net operating profit after tax (NOPAT) | $2,897 | $3,009 | |
Net income | 2,798 | 2,845 | |
Total assets | 15,671 | 15,465 | $17,451 |
Equity | 3,147 | 3,384 | 3,384 |
Net operating profit after tax (NOA) | 9,224 | 9,840 | 10,493 |
Treasury stock | 21,070 | 19,475 | 17,274 |
a. Compute profitability measures: RNOA, ROA and ROE for 2019 and 2018 using the numbers as reported by the company. Note: Round answers to one decimal place (ex: 0.2345 = 23.5%).
Metric | 2019 | 2018 |
---|---|---|
RNOA | ||
ROA | ||
ROE |
b. Adjust equity and total assets for the amount of treasury stock.
$ millions | 2019 | 2018 | 2017 |
---|---|---|---|
Assets, restated | |||
Equity, restated |
Using these restated numbers, recompute RNOA, ROA and ROE for both years. Note: Round answers to one decimal place (ex: 0.2345 = 23.5%).
Metric | 2019 | 2018 |
---|---|---|
RNOA | ||
ROA | ||
ROE |
c. Which profitability measures (from part a or part b) better reflect the companys profit levels during the two years? Answerpart a. - using reported numberspart b. - using restated numbers
Of the three measures, which one is least influenced by the companys stock repurchase activity?
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