Nucor Corporation produces steel and steel products at its eight mills and is a major recycler of scrap metal. The following data relate to Nucor for four years. In 2017, Nucor’s net income was higher by $175.2 million because of a one-time effect of the Tax Cuts and Jobs Act. Nucor Corporation ($ in millions) 2015 2016 2017 2018 Total assets $14,327.0 $15,223.5 $15,841.3 $17,920.6 Common stockholders’ equity $7,849.9 $8,254.7 $9,084.8 $10,202.0 Total debt $4,388.5 $4,357.1 $3,795.1 $4,291.1 Sales $16,208.1 $20,252.4 $25,067.3 Net income 900.4 1,380.6 2,481.1 Interest expense 169.2 173.6 135.5 Assumed marginal income tax rate 0.37 0.37 0.23 Source: Nucor Form 10-Ks for 2015–2018. Required: In the following analyses, eliminate the one-time net income effect of the Tax Cuts and Jobs Act on 2017’s results. Calculate Nucor’s ROA for 2016, 2017, and 2018. Decompose ROA into operating profit margin and asset turnover components. Has Nucor’s profitability changed over the three years? Calculate the rate of return on common stockholders’ equity for 2016, 2017, and 2018.

Nucor Corporation produces steel and steel products at its eight mills and is a major recycler of scrap metal. The following data relate to Nucor for four years. In 2017, Nucor’s net income was higher by $175.2 million because of a one-time effect of the Tax Cuts and Jobs Act. Nucor Corporation ($ in millions) 2015 2016 2017 2018 Total assets $14,327.0 $15,223.5 $15,841.3 $17,920.6 Common stockholders’ equity $7,849.9 $8,254.7 $9,084.8 $10,202.0 Total debt $4,388.5 $4,357.1 $3,795.1 $4,291.1 Sales $16,208.1 $20,252.4 $25,067.3 Net income 900.4 1,380.6 2,481.1 Interest expense 169.2 173.6 135.5 Assumed marginal income tax rate 0.37 0.37 0.23 Source: Nucor Form 10-Ks for 2015–2018. Required: In the following analyses, eliminate the one-time net income effect of the Tax Cuts and Jobs Act on 2017’s results. Calculate Nucor’s ROA for 2016, 2017, and 2018. Decompose ROA into operating profit margin and asset turnover components. Has Nucor’s profitability changed over the three years? Calculate the rate of return on common stockholders’ equity for 2016, 2017, and 2018.

Financial Accounting Intro Concepts Meth/Uses

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ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter10: Long-lived Tangible And Intangible Assets

Section: Chapter Questions

Problem 18E

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Nucor Corporation
($ in millions)	2015	2016	2017	2018
Total assets	$14,327.0	$15,223.5	$15,841.3	$17,920.6
Common stockholders’ equity	$7,849.9	$8,254.7	$9,084.8	$10,202.0
Total debt	$4,388.5	$4,357.1	$3,795.1	$4,291.1
Sales		$16,208.1	$20,252.4	$25,067.3
Net income		900.4	1,380.6	2,481.1
Interest expense		169.2	173.6	135.5
Assumed marginal income tax rate		0.37	0.37	0.23