Thank you in advance!

This exercise is built around Kroger's financial statements from the chapter. Total shareholders' equity-The Kroger Co. was $5,384 million at February 1, 2014. Refer to Exhibits 6.1, 6.6 and 6.14 from the chapter. Required: 1. Kroger earned an ROA of 6.9% in fiscal 2014. What was ROCE that year? (Round your answer to 1 decimal place.) 2. ROA at the company fell to 3.7% in fiscal 2017 (adjusted to eliminate the one-time effect on earnings of the Tax Cuts and Jobs Act). What was ROCE that year (also adjusted for the Tax Cuts and Jobs Act)? (Round your answer to 1 decimal place.) 3. Did financial leverage help or hurt Kroger in fiscal 2017? % 1. ROCE 2014 2. ROCE 2017 3. Did financial leverage help or hurt Kroger in fiscal 2017? % Save 6.1 The Kroger Co. Comparative Income Statements Fiscal Year: 2017 2016 2015 2014 (52 weeks) (53 weeks) (52 weeks) (52 weeks) February 3, January January January 2018 28, 2017 30, 2016 31, 2015 $ 122,662 $ 115,337 $ 109,830 $ 108,465 89,502 85,496 85.512 95.662 21,568 911 2,436 2,085 17,161 707 19,178 881 2,340 3,436 522 17,946 723 2,089 3,576 1,948 (S in millions) Year Ended: Sales Merchandise costs, including advertising, warehousing, and transportation, excluding items shown separately below Operating, general and administrative Rent Depreciation and amortization Operating profit Interest expense Net earnings before income tax (benefit) expense Provision for income taxes Net earnings including noncontrolling interests Net earnings (loss) attributable to noncontrolling interests Net earnings attributable to The Kroger Co. Source: The Kroger Company Form 10-Ks for the 3,137 601 482 488 1,484 (405) 2,914 957 3,094 1,045 2,649 902 1.889 1,957 2.049 1.747 (18) (18) 10 19 $ 1,907 $ 1,975 $ 2,039 $ 1,728 The Kroger Co. Save nce Sheets February January January January 3, 2018 28, 2017 30, 2016 31, 2015 (S in millions) Assets Current assets: Cash and temporary cash investments Store deposits in-transit Receivables FIFO inventory LIFO reserve Assets held for sale Prepaid and other current assets Total current assets S 347 $ 322 $ 277 $ 268 1,161 910 923 988 1.637 1.649 1.734 1.266 7,781 7,852 7.440 6.933 (1.248) (1.291) (1.272) (1.245) 604 835 898 790 701 11,117 10,340 9,892 8,911 21.071 21.016 19.619 17.912 1.100 1.153 1.053 757 2.925 3,031 2.724 2,304 984 965 609 613 S 37.197 $36.505 S 33.897 S 30.497 Property, plant and equipment, net Intangibles, net Goodwill Other assets Total assets Liabilities and Shareholders' Equity Current liabilities: Current portion of long-term debt including obligations under capital leases and financing obligations Trade accounts payable Accrued salaries and wages Deferred income taxes Liabilities held for sale Other current liabilities $ 3,560 $ 2.252 S 2.370 $ 1,874 5,858 5,818 5,728 5,052 1.099 1.234 1,426 1.291 251 221 287 259 3,421 3,305 3,226 2,888 14.197 Total current liabilities 12.860 12.971 11,392 2016 January 28, 2017 $ 1,957 2015 January 30, 2016 $ 2,049 2014 January 31, 2015 $ 1,747 2,049 EXHIBIT 6.14 The Kroger Co. Return on Assets Fiscal Year: 2017 February ($ in millions) Year Ended: 3, 2018 Net earnings including noncontrolling interests, as reported $ 1,889 Less: Increase in earnings due to enactment of new tax law 902 Net earnings including noncontrolling interests, excluding effect of new tax law 987 Interest expense 601 x one minus marginal tax rate* 0.65 Interest expense (after-tax) 391 Earnings before interest (EBI) excluding effect of new tax law 1,378 Assets at end of year 37,197 Assets at beginning of year 36,505 Average assets 36,851 Return on assets (EBI/Average assets) 3.7% Source: Amounts derived from information in The Kroger Company's Form 10-Ks for the years presented. 1,957 522 0.65 482 0.65 339 2,296 36,505 33,897 35,201 6.5% 313 2,362 33,897 30,497 32,197 7.3% 1,747 488 0.65 317 2,064 30,497 29,281 29,889 6.9% This exercise is built around Kroger's financial statements from the chapter. Total shareholders' equity-The Kroger Co. was $5,384 million at February 1, 2014. Refer to Exhibits 6.1, 6.6 and 6.14 from the chapter. Required: 1. Kroger earned an ROA of 6.9% in fiscal 2014. What was ROCE that year? (Round your answer to 1 decimal place.) 2. ROA at the company fell to 3.7% in fiscal 2017 (adjusted to eliminate the one-time effect on earnings of the Tax Cuts and Jobs Act). What was ROCE that year (also adjusted for the Tax Cuts and Jobs Act)? (Round your answer to 1 decimal place.) 3. Did financial leverage help or hurt Kroger in fiscal 2017? % 1. ROCE 2014 2. ROCE 2017 3. Did financial leverage help or hurt Kroger in fiscal 2017? % Save 6.1 The Kroger Co. Comparative Income Statements Fiscal Year: 2017 2016 2015 2014 (52 weeks) (53 weeks) (52 weeks) (52 weeks) February 3, January January January 2018 28, 2017 30, 2016 31, 2015 $ 122,662 $ 115,337 $ 109,830 $ 108,465 89,502 85,496 85.512 95.662 21,568 911 2,436 2,085 17,161 707 19,178 881 2,340 3,436 522 17,946 723 2,089 3,576 1,948 (S in millions) Year Ended: Sales Merchandise costs, including advertising, warehousing, and transportation, excluding items shown separately below Operating, general and administrative Rent Depreciation and amortization Operating profit Interest expense Net earnings before income tax (benefit) expense Provision for income taxes Net earnings including noncontrolling interests Net earnings (loss) attributable to noncontrolling interests Net earnings attributable to The Kroger Co. Source: The Kroger Company Form 10-Ks for the 3,137 601 482 488 1,484 (405) 2,914 957 3,094 1,045 2,649 902 1.889 1,957 2.049 1.747 (18) (18) 10 19 $ 1,907 $ 1,975 $ 2,039 $ 1,728 The Kroger Co. Save nce Sheets February January January January 3, 2018 28, 2017 30, 2016 31, 2015 (S in millions) Assets Current assets: Cash and temporary cash investments Store deposits in-transit Receivables FIFO inventory LIFO reserve Assets held for sale Prepaid and other current assets Total current assets S 347 $ 322 $ 277 $ 268 1,161 910 923 988 1.637 1.649 1.734 1.266 7,781 7,852 7.440 6.933 (1.248) (1.291) (1.272) (1.245) 604 835 898 790 701 11,117 10,340 9,892 8,911 21.071 21.016 19.619 17.912 1.100 1.153 1.053 757 2.925 3,031 2.724 2,304 984 965 609 613 S 37.197 $36.505 S 33.897 S 30.497 Property, plant and equipment, net Intangibles, net Goodwill Other assets Total assets Liabilities and Shareholders' Equity Current liabilities: Current portion of long-term debt including obligations under capital leases and financing obligations Trade accounts payable Accrued salaries and wages Deferred income taxes Liabilities held for sale Other current liabilities $ 3,560 $ 2.252 S 2.370 $ 1,874 5,858 5,818 5,728 5,052 1.099 1.234 1,426 1.291 251 221 287 259 3,421 3,305 3,226 2,888 14.197 Total current liabilities 12.860 12.971 11,392 2016 January 28, 2017 $ 1,957 2015 January 30, 2016 $ 2,049 2014 January 31, 2015 $ 1,747 2,049 EXHIBIT 6.14 The Kroger Co. Return on Assets Fiscal Year: 2017 February ($ in millions) Year Ended: 3, 2018 Net earnings including noncontrolling interests, as reported $ 1,889 Less: Increase in earnings due to enactment of new tax law 902 Net earnings including noncontrolling interests, excluding effect of new tax law 987 Interest expense 601 x one minus marginal tax rate* 0.65 Interest expense (after-tax) 391 Earnings before interest (EBI) excluding effect of new tax law 1,378 Assets at end of year 37,197 Assets at beginning of year 36,505 Average assets 36,851 Return on assets (EBI/Average assets) 3.7% Source: Amounts derived from information in The Kroger Company's Form 10-Ks for the years presented. 1,957 522 0.65 482 0.65 339 2,296 36,505 33,897 35,201 6.5% 313 2,362 33,897 30,497 32,197 7.3% 1,747 488 0.65 317 2,064 30,497 29,281 29,889 6.9%