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. 1. 2016 2017 2018 ROA % % % 2. 2016 2017 2018 Operating profit margin % % % Asset turnover 3. Has Nucor’s profitability changed over the three years? _____ 4. 2016 2017 2018 Rate of return on common stockholders’ equity % % %

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter12: Balanced Scorecard And Other Performance Measures

Section: Chapter Questions

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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.

	2016	2017	2018
ROA	%	%	%

2.	2016	2017	2018
Operating profit margin	%	%	%
Asset turnover

3. Has Nucor’s profitability changed over the three years? _____

	2016	2017	2018
Rate of return on common stockholders’ equity	%	%	%

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