VF Corporation is an apparel company that owns recognizable brands like Timberland, Vans, Reef, and 7 For All Mankind. Exhibit 5.18 and 5.19 present balance sheets and income statements, respectively, for Year 1 and Year 2.(VF Corporation previously had non controlling interests, which were acquired during Year 1. Nevertheless, there is a negative balance at the end of Year 1, presumably pertaining to losses absorbed or currency adjustments. The non controlling interests will only affect your calculations through the use of average balances of financing obligations where non controlling interests should be allocated.)

REQUIREDa. Compute ROCE for Year 2 under the traditional calculation discussed in Chapter 4.b. Compute ROCE for Year 2 using the alternative decomposition, highlighting each component (NOPAT, leverage, spread). First, allocate individual line items on the balance sheet and income statement to operating and financing activities. Then compute each of the following for Year 2:(1) Net operating assets(2) Net financing obligations(3) Common equity(4) NOPAT(5) Net financing expense (after tax)(6) Operating ROA(7) Leverage(8) Net borrowing rate(9) Spread

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Exhibit 5.18 VF Corporation Consolidated Balance Sheets (amounts in thousands) (Problem 5.17) December Year 2 Year 1 ASSETS Current assets $ 597 461 1,222,345 Cash and equivale nts $ 341,228 Accounts receivable, net 1,120,246 Inventories 1,354,158 1,453,645 Deferred income taxes 140,515 106,717 Other current assets 135,104 166,108 Total current assets 3,449,583 3,187,944 Property, plant and equipment 828,218 737,451 Intangible assets 2,917,058 2,958,463 Goodwill 2,009,757 2,023,460 Other assets 428,405 405,808 Total assets $9,633,021 $9,313,126 UABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Short-term borrowings $ 12,559 $ 281,686 Current portion of long-term debt Accounts payable 402,873 2,744 637,116 744,486 1,666,032 1,831,781 562,638 Accrued liabilities 754,142 Total current liabilities 1,732,212 Long-tem debt 1,429,166 Other liabilities 1,346,018 1,290,138 Commitments and contingendes Stockholders' equity Preferred stock, par value $1, shares authorized, 25,000,000; no shares outstanding in Year 2 and Year 1 Common stock, stated value $1; shares authorized, 300,000,000; 110,204,734 shares outstanding in Year 2 and 110,556,981 in Year 1 110,205 110,557 Additional paid-in capital Accumulated other comprehensive income (lass) Retained eamings 2,527,868 2,316,107 (453,895) (421,477) 2,941,447 2,520,804 Total equity attributable to VF corporation Noncontrolling interests Total stockholders' equity Total liabilities and stockholders' equity 5,125,625 4,525,991 (816) 5,125,625 $9,633,021 4,525,175 $9,313,126