c. Which profitability measures (from part a or part b) better reflect the company's profit levels during the two years?Of the three measures, which one is least influenced by the company's stock repurchase activity?→Check Compute and Interpret RatiosSelected balance sheet and income statement information from Illinois Tool Works follows.$ millionsNet operating profit after tax (NOPAT) $2,897 $3,009Net income2,798 2,845Total assets15,671 15,465 $17,4513,147 3,384 3,38410,4939,224 9,84021,070 19,47517,274EquityNet operating profit after tax (NOA)Treasury stocka. Compute profitability measures: RNOA, ROA and ROE for 2019 and 2018 using the numbers as reported by the company.Note: Round answers to one decimal place (ex: 0.2345 = 23.5%).2018MetricRNOAROAROE2019$ millionsAssets, restated $Equity, restatedMetricRNOAb. Adjust equity and total assets for the amount of treasury stock.201920182017ROAROE%%%2019%%%$$Using these restated numbers, recompute RNOA, ROA and ROE for both years.Note: Round answers to one decimal place (ex: 0.2345 = 23.5%).2018%%%2019 2018 2017%%%$$

Financial ratios are defined as measures to project the growth of an entity. Two or more variables…

Compute and Interpret Ratios Selected balance sheet and income statement information from Illinois Tool Works follows. $ millions 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 10,493 Net operating profit after tax (NOA) 9,224 9,840 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%). 2018 Metric RNOA ROA ROE 2019 $ millions Assets, restated $ Equity, restated % % % b. Adjust equity and total assets for the amount of treasury stock. 2019 2018 2017 Metric 2019 RNOA ROA ROE 2019 2018 2017 % % % $ $ % % % Using these restated numbers, recompute RNOA, ROA and ROE for both years. Note: Round answers to one decimal place (ex: 0.2345 = 23.5%). 2018 % % % $

Compute and Interpret Ratios Selected balance sheet and income statement information from Illinois Tool Works follows. $ millions 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 10,493 Net operating profit after tax (NOA) 9,224 9,840 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%). 2018 Metric RNOA ROA ROE 2019 $ millions Assets, restated $ Equity, restated % % % b. Adjust equity and total assets for the amount of treasury stock. 2019 2018 2017 Metric 2019 RNOA ROA ROE 2019 2018 2017 % % % $ $ % % % Using these restated numbers, recompute RNOA, ROA and ROE for both years. Note: Round answers to one decimal place (ex: 0.2345 = 23.5%). 2018 % % % $

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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