Compute (a) return on assets and (b) the adjusted return on assets for each of the three years. Assume a statutory tax rate of 37% for 2017 and 22% for 2018 and 2019.
Compute ROA and adjusted ROA
CSX Corporation reported the following in its tax footnote to its 2019 financial statements. Use this information to answer the requirements.
| $ millions | 2019 | 2018 | 2017 |
|---|---|---|---|
| Net income | $3,331 | $3,309 | $5,471 |
| Interest expense, net | 737 | 639 | 546 |
| Average total assets | 37,493 | 36,234 | 35,577 |
Compute (a) return on assets and (b) the adjusted return on assets for each of the three years.
Assume a statutory tax rate of 37% for 2017 and 22% for 2018 and 2019.
a. Compute return on assets (ROA) for 2017, 2018, and 2019
Note: 1. Select the appropriate numerator and denominator used to compute ROA from the drop-down menu options. 2. Enter the numerator and denominator amounts to compute ROA for each year.
| Year | Numerator | Denominator | ROA | |
|---|---|---|---|---|
| AnswerNet incomeNet income (adjusted)Interest expense, netAverage total assetsAverage total equity | AnswerNet incomeNet income (adjusted)Interest expense, netAverage total assetsAverage total equity | |||
| 2017 | Answer | Answer | ||
| 2018 | Answer | Answer | ||
| 2019 | Answer | Answer |
b. Compute adjusted return on assets (ROA) for 2017, 2018, and 2019
Note: 1. Select the appropriate numerator and denominator used to compute adjusted ROA from the drop-down menu options. 2. Enter the numerator and denominator amounts to compute adjusted ROA for each year.
| Year | Numerator | Denominator | adjusted ROA | |
|---|---|---|---|---|
| AnswerNet incomeNet income (adjusted)Interest expense, netAverage total assetsAverage total equity | AnswerNet incomeNet income (adjusted)Interest expense, netAverage total assetsAverage total equity | |||
| 2017 | Answer | Answer | ||
| 2018 | Answer | Answer | ||
| 2019 | Answer | Answer |
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
