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        %       %       %

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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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.

  1. Calculate Nucor’s ROA for 2016, 2017, and 2018.
  2. Decompose ROA into operating profit margin and asset turnover components.
  3. Has Nucor’s profitability changed over the three years?
  4. 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        %       %       %      

 

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