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(Part one of the question) Income statements and balance sheets follow for E.I. DuPont de Nemours and Company. Refer to these financial statements to answer the requirements. 1. E. I. du Pont de Nemours and Company Consolidated Income Statements For The Year Ended December 31 $ milions) 2016 2015 S 25,130 15,571 4,615 1,898 (697) 342 $24,594 15,155 Net sales Cost of goods sold and other operating charges Selling. general and administrative expenses Research and development expense Other (income) expense, net Interest expense Employee separation/asset related charges(income), 4,319 1,641 (708) 370 net Income from continuing operations before income taxes Provision for income taxes on continuing operations Income from continuing operations after income taxes Income from discontinued operations after income 552 3,265 744 2,521 810 2,591 696 1,895 64 taxes Net income Less: Net income attributable to no controlling interests Net income attributable to DuPont 2,525 12 $2,513 1959 1,953 E, I. du Pont de Nemours and Company Consolidated Balance Sheets As of December 31 (S millions) 2016 2015 Assets Cash and cash equivalents Marketable securities Accounts and notes receivable, net Inventories Prepaid expenses Total current assets $4,605 1,362 4,971 5,673 506 17,117 S 5,300 906 4,643 6,140 398 17,387 Net property, plant and equipment GoodwilI Other intangible assets Investment in affiliates 9,231 4,180 3,664 649 9,784 4,248 4,144 688
Expert Answer
a). Solution :-
Net operating profit after tax (NOPAT) = Income from continuing operations before tax * (1 – Tax rate).
Year 2016
Net operating profit after tax (NOPAT) = 3265 * (1 – 0.37) = $ 2065.95
Year 2015
Net operating profit after tax (NOPAT) = 2591 * (1 – 0.37) = $ 1632.33
Conclusion :-
| Net operating profit after tax (NOPAT) for the Year 2015 | $ 1632.33 |
| Net operating profit after tax (NOPAT) for the Year 2016 | $ 2065.95 |
b). Solution :- Net Operating Assets (NOA) = Operating assets – Operating liabilities.
Year 2016
Operating assets = (Total assets – Cash) = (39964 – 4605) = $ 35359
Operating liabilities = (Total liabilities – Short-term borrowings – Long-term borrowings)
= (29768 – 429 – 8107)
= $ 21232.
Accordingly, Net Operating Assets (NOA) = 35359 – 21232 = $ 14127.
Year 2015
Operating assets = (Total assets – Cash) = (41166 – 5300) = $ 35866.
Operating liabilities = (Total liabilities – Short-term borrowings – Long-term borrowings)
= (30966 – 1165 – 7642)
= $ 22159.
Accordingly, Net Operating Assets (NOA) = 35866 – 22159 = $ 13707.
Conclusion :-
| Net Operating Assets (NOA) for the Year 2015 | $ 13707 |
| Net Operating Assets (NOA) for the Year 2016 | $ 14127 |
c). Solution :- Return on net operating assets (RNOA) = (Net income / Average net operating assets).
Year 2016
Return on net operating assets (RNOA) = 2525 / (14127 + 13707) / 2
= 2525 / (27834 / 2)
= 2525 / 13917
= 0.1814 i.e., 18.14 %
Year 2015
Return on net operating assets (RNOA) = 1959 / (13707 + 13239) / 2
= 1959 / (26946 / 2)
= 1959 / 13473
= 0.1454 i.e., 14.54 %
Conclusion :-
| Return on net operating assets (RNOA) for Year 2015 | 14.54 % |
| Return on net operating assets (RNOA) for Year 2016 | 18.14 % |
