Net nonoperating expense (NNE) 26 Net income attributable to Cummins Inc. Net operating assets (NOA) 2,141...

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Net nonoperating expense (NNE) 26 Net income attributable to Cummins Inc. Net operating assets (NOA) 2,141 9,210 Net nonoperating obligations (NNO) 951 Equity of Cummins Inc. shareholders 7,348 Hint: You should be able to compute the following for Cummins' investee companies: $ millions 2018 Nonoperating expense before tax $17 $13 Net nonoperating expense (NNE) a. Compute net operating profit after tax (NOPAT) for the EMI investees. Round to the nearest whole number. 660 million b. Compute net operating assets (NOA) and net nonoperating obligations (NNO) for the EMI investees. NOA $ 2,181 million NNO $ 218 million c. Following the process in Analyst Adjustments box 9.1, reformulate the following ratios for Cummins for 2018. For simplicity only, use year-end balance sheet numbers provided instead of averages. First, compute the adjusted balances. (Use a negative sign with adjustment answer if it reduces the unadjusted amount.) Income Statement Revenue NOPAT: Subtract share of EMI earnings Add EMI NOPAT Net nonoperating expense Net income Cummins Adjustment Adjusted Balances $ 23,771 $ 2,213 7,352 $ 31,123 0 26 (336) 660- 13 0 % 2,537 x 49 x 2,141 *Note: For "Add EMI NOPAT" row, only enter an answer under the Adjustment column (EMI NOPAT). Leave Cummins and Adjusted Balances answers blank (use row above to enter Cummins' NOPAT and Adjusted NOPAT balance). Next, compute the following ratios: 1. using Cummins' figures (unadjusted) and 2. using the adjusted balances as computed above. Round RNOA, NOPM, and ROE to one decimal place (ex: 0.2345=23.5%) 9 Round NOAT and FLEV to two decimal places. Hint: Adjusted Net income is $2,452 million. Unadjusted Adjusted RNOA 24%-> 22.3% * NOPM 9.3% - 8.2 % - ROE 29.1 %- 29.1% * NOAT 2.58 2.73 x FLEV (0.02) * 0.02 % Net nonoperating expense (NNE) 26 Net income attributable to Cummins Inc. Net operating assets (NOA) 2,141 9,210 Net nonoperating obligations (NNO) 951 Equity of Cummins Inc. shareholders 7,348 Hint: You should be able to compute the following for Cummins' investee companies: $ millions 2018 Nonoperating expense before tax $17 $13 Net nonoperating expense (NNE) a. Compute net operating profit after tax (NOPAT) for the EMI investees. Round to the nearest whole number. 660 million b. Compute net operating assets (NOA) and net nonoperating obligations (NNO) for the EMI investees. NOA $ 2,181 million NNO $ 218 million c. Following the process in Analyst Adjustments box 9.1, reformulate the following ratios for Cummins for 2018. For simplicity only, use year-end balance sheet numbers provided instead of averages. First, compute the adjusted balances. (Use a negative sign with adjustment answer if it reduces the unadjusted amount.) Income Statement Revenue NOPAT: Subtract share of EMI earnings Add EMI NOPAT Net nonoperating expense Net income Cummins Adjustment Adjusted Balances $ 23,771 $ 2,213 7,352 $ 31,123 0 26 (336) 660- 13 0 % 2,537 x 49 x 2,141 *Note: For "Add EMI NOPAT" row, only enter an answer under the Adjustment column (EMI NOPAT). Leave Cummins and Adjusted Balances answers blank (use row above to enter Cummins' NOPAT and Adjusted NOPAT balance). Next, compute the following ratios: 1. using Cummins' figures (unadjusted) and 2. using the adjusted balances as computed above. Round RNOA, NOPM, and ROE to one decimal place (ex: 0.2345=23.5%) 9 Round NOAT and FLEV to two decimal places. Hint: Adjusted Net income is $2,452 million. Unadjusted Adjusted RNOA 24%-> 22.3% * NOPM 9.3% - 8.2 % - ROE 29.1 %- 29.1% * NOAT 2.58 2.73 x FLEV (0.02) * 0.02 %