Question: Compute ROE and Nonoperating Return with Negative NNO and No Noncontrolling Interest Refer to the balance sheets and income statement below for Facebook Inc. FACEBOOK
Compute ROE and Nonoperating Return with Negative NNO and No Noncontrolling Interest Refer to the balance sheets and income statement below for Facebook Inc.
FACEBOOK INC.
Consolidated Statement of Income
For Year Ended December 31, $ millions
2018
Revenue
$57,234
Costs and expenses
Cost of revenue
9,355
Research and development
10,273
Marketing and sales
7,846
General and administrative
3,451
Total costs and expenses
30,925
Income from operations
26,309
Interest and other income (expense), net
448
Income before provision for income taxes
26,757
Provision for income taxes
3,249
Net income
$23,508
FACEBOOK INC.
Consolidated Balance Sheet
At December 31, $ millions
2018
2017
Current assets
Cash and cash equivalents
$10,019
$8,079
Marketable securities
31,095
33,632
Accounts receivable, net
7,777
5,832
Prepaid expenses and other current assets
1,779
1,020
Total current assets
50,670
48,563
Property and equipment, net
24,683
13,721
Intangible assets, net
1,294
1,884
Goodwill
18,301
18,221
Other assets
$2,576
$2,135
Total assets
$97,524
$84,524
Current liabilities
Accounts payable
$820
$380
Partners payable
541
390
Accrued expenses and other current liabilities
5,509
2,892
Deferred revenue and deposits
147
98
Total current liabilities
7,017
3,760
Other liabilities
6,190
6,417
Total liabilities
13,207
10,177
Stockholders' equity
Common stock and additional paid-in capital
42,906
40,584
Accumulated other comprehensive loss
(760)
(227)
Retained earnings
42,171
33,990
Total stockholders' equity
84,317
74,347
Total liabilities and stockholders' equity
$97,524
$84,524
Use these financial statements to answer the requirements.
Required For the 2018 fiscal year, Facebook had a return on net operating assets (RNOA) of 61.07%.a. Compute ROE.Note: Do not round until your final answer.Note: Round final answer percentage to two decimal places (for example, enter 6.66% for 6.6555%).
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%b. Compute net nonoperating obligations (NNO) for 2018 and 2017, net nonoperating expense (NNE), and the NNE as a percentage of NNO (NNEP), assuming a 22% statutory tax rate.Note: Do not round until your final answer.Note: Round NNEP percentage to two decimal places (for example, enter 6.66% for 6.6555%).2018 NNO: $
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million2017 NNO: $
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million2018 NNE: $
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million2018 NNEP:
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%c. Compute FLEV and Spread.Note: Do not round until your final answer.Note: For FLEV, round final amount to four decimal places (for example, enter 6.7756 for 6.775555).Note: Round final Spread percentage to two decimal places (for example, enter 6.66% for 6.6555%).2018 FLEV:
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2018: Spread:
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%d. Show that ROE = RNOA + (FLEV Spread).Note: For FLEV, round amount to four decimal places (for example, enter 6.7756 for 6.775555).Note: For RNOA, Spread, and ROE, round percentages to two decimal places (for example, enter 6.66% for 6.6555%).
RNOA
+ (
FLEV
x
Spread
=
ROE
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+ (
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x
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) =
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e. What is the nonoperating return for the year?Note: Round Spread percentage to two decimal places (for example, enter 6.66% for 6.6555%).
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%
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