50.1K

Verified Solution

Link Copied!

Compute, Disaggregate, and Interpret ROE and RNOA Graphical representations of the Ingersoll Rand 2018 income statement and average balance sheets (20172018) follow.

a. Compute the 2018 return on equity (ROE) and 2018 return on net operating assets (RNOA).

Note: 1. Select the appropriate numerator and denominator used to compute ROE from the drop-down menu options. 2. Enter the numerator and denominator amounts to compute ROE.

	Numerator	Denominator	ROE
	AnswerOperating expenses including tax on operating profitEarnings attributable to company shareholdersSalesNOPATAverage operating assetsAverage operating liabilitiesAverage net operating assetsAverage company shareholders' equityAverage nonoperating assetsAverage nonoperating liabilitiesAverage noncontrolling interest	AnswerOperating expenses including tax on operating profitEarnings attributable to company shareholdersSalesNOPATAverage operating assetsAverage operating liabilitiesAverage net operating assetsAverage company shareholders' equityAverage nonoperating assetsAverage nonoperating liabilitiesAverage noncontrolling interest
	Answer	Answer

Note: 1. Select the appropriate numerator and denominator used to compute RNOA from the drop-down menu options. 2. Enter the numerator and denominator amounts to compute RNOA.

	Numerator	Denominator	RNOA
	AnswerOperating expenses including tax on operating profitEarnings attributable to company shareholdersSalesNOPATAverage operating assetsAverage operating liabilitiesAverage net operating assetsAverage company shareholders' equityAverage nonoperating assetsAverage nonoperating liabilitiesAverage noncontrolling interest	AnswerOperating expenses including tax on operating profitEarnings attributable to company shareholdersSalesNOPATAverage operating assetsAverage operating liabilitiesAverage net operating assetsAverage company shareholders' equityAverage nonoperating assetsAverage nonoperating liabilitiesAverage noncontrolling interest
	Answer	Answer

b. Disaggregate RNOA into net operating profit margin (NOPM) and net operating asset turnover (NOAT).

Note: 1. Select the appropriate numerator and denominator used to compute NOPM from the drop-down menu options. 2. Enter the numerator and denominator amounts to compute NOPM.

	Numerator	Denominator	NOPM
	AnswerOperating expenses including tax on operating profitEarnings attributable to company shareholdersSalesNOPATAverage operating assetsAverage operating liabilitiesAverage net operating assetsAverage company shareholders' equityAverage nonoperating assetsAverage nonoperating liabilitiesAverage noncontrolling interest	AnswerOperating expenses including tax on operating profitEarnings attributable to company shareholdersSalesNOPATAverage operating assetsAverage operating liabilitiesAverage net operating assetsAverage company shareholders' equityAverage nonoperating assetsAverage nonoperating liabilitiesAverage noncontrolling interest
	Answer	Answer

Note: 1. Select the appropriate numerator and denominator used to compute NOAT from the drop-down menu options. 2. Enter the numerator and denominator amounts to compute NOAT.

	Numerator	Denominator	NOAT
	AnswerOperating expenses including tax on operating profitEarnings attributable to company shareholdersSalesNOPATAverage operating assetsAverage operating liabilitiesAverage net operating assetsAverage company shareholders' equityAverage nonoperating assetsAverage nonoperating liabilitiesAverage noncontrolling interest	AnswerOperating expenses including tax on operating profitEarnings attributable to company shareholdersSalesNOPATAverage operating assetsAverage operating liabilitiesAverage net operating assetsAverage company shareholders' equityAverage nonoperating assetsAverage nonoperating liabilitiesAverage noncontrolling interest
	Answer	Answer

c. Compute nonoperating return for 2018 as ROE - RNOA. Use ROE and RNOA as calculated above.

	ROE	RNOA	Nonoperating return
	Answer	Answer

Answer & Explanation Solved by verified expert

See Answer