3-59 Module 3 Profitability Analysis and Interpretation LO4, 5, 6, 7, 8 P3-56. Analysis and Interpretation of Profitability MONDELEZ INTERNATIONAL INC. (MDLZ) Mondelez International Inc. is one of the world's largest snacks companies, with a brand portfolio that includes: Nabisco, Oreo, Milka, Cadbury and Trident. The company's balance sheets and income state- ments follow. Refer to these financial statements to answer the requirements. MONDELEZ INTERNATIONAL INC. Consolidated Statement of Earnings For the Years Ended December 31 (in millions) 2015 2014 2013 Net revenues Cost of sales. Gross profit.... Selling, general and administrative expenses. Asset impairment and exit costs......... Gains on coffee business transactions and divestitures..evenue Loss on deconsolidation of Venezuela. Amortization of intangibles. Operating income......... Interest and other expense, net. Earnings from continuing operations before income taxes Provision for income taxes. Earnings from continuing operations Earnings from discontinued operations, net of income taxes Net earnings... Noncontrolling interest $29,636 $34,244 $35,299 18.124 21,647 22,189 11,512 12,597 13,110 7,577 8,457 8,679 901 692 273 (6,822) (30) 206 217 8,897 3,242 3,971 1,013 688 1,579 7,884 593 7,291 2,201 2,332 2,554 2,392 353 60 1.603 7,291 2,201 3,935 17 20 Net earnings attributable. International........ Mondelez $ 7,267 $ 2,184 $ 3,915 MONDELEZ INTERNATIONAL INC. Consolidated Balance Sheets As of December 31 (in millions, expect share data) 2015 2014 Assets Cash and cash equivalents............... Trade receivables (net of allowances of $54 at 2015 and $66 at 2014). Other receivables (net of allowances of $109 at 2015 and $91 at 2014)... Deferred income taxes Inventories, net........ Other current assets. Total current assets. Property, plant and equipment, net. Goodwill Intangible assets, net. Prepaid pension assets. Equity method investments. Other assets. Total Assets.. Module 3 Profitability Analysis and Interpretation 3-60 As of December 31 (in millions, expect share data) 2015 2014 Liabilities... Short-term borrowings. Current portion of long-term debt. Accounts payable. Accrued marketing... Accrued employment costs Other current liabilities. Total current liabilities. Long-term debt........ Deferred income taxes. Accrued pension costs. Accrued postretirement health care costs. Other liabilities...... $ 1,870 $1,631 2,634 3,802 1,212 949 2,609 3,480 -480 633 1,408 8,958 11,750 8,362 9,827 20,664 23,3891 18,768 20.335 69 53 5,387 662 635 755 $62,843 $66,771 $236 $ 1,305 605 1,530 4,890 5,299 1,634 2,047 844 946 2,713 2,880. 10,922 14,007 14,557 13,821 4,750 5,512 2,183 2,912 ,499 526. 1,832 Total liabilities. Equity Common stock, no par value (1,996,537,778 shares issued at 2015 and 2014). $34,743 $38,918 Additional paid-in capital. Retained eamingsscover33004 Accumulated other comprehensive losses. Treasury stock, at costsectiones Total Mondelz International shareholders' equity. Noncontrolling interest 88. Total equity... Total liabilties and equity. 2,140 31,760 31,651 20,700 14,529 (9.986) (7,318) (14,462) 28,012 27,750 (11,112) 103 28,100 27,853 $62,843 $66,771 continued Required a.Compute net operating profit after tax (NOPAT) for 2015. Assume that the combined federal and state statutory tax rate is 37%. b.Compute net operating assets (NOA) for 2015 and 2014. c.Compute RNOA and disaggregate it into net operating profit margin (NOPM) and net operating asset turnover (NOAT) for 2015; confirm that RNOA NOPM X NOAT. The median NOPM and NOAT for companies in the packaged food industry is 5% and 2.1, with a median RNOA of 10.5%. Comment on NOPM and NOAT estimates for Mondelez in comparison to industry medians. d.Compute net nonoperating obligations (NNO) for 2015 and 2014. Confirm the relation: NOA=NNO + Total equity. e.Compute return on equity (ROE) for 2015. f. Infer the nonoperating return component of ROE for 2015. g.Comment on the difference between ROE and RNOA. What does this relation suggest about Monde- lez's use of debt