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 $54,163 Costs and expenses Cost of revenue Research and development Marketing and sales General and administrative Total costs and expenses Income from operations Interest and other income (expense), net Income before provision for income taxes Provision for income taxes 9,355 10,273 7,846 3,451 30,925 23,238 448 23,686 3,249 Net income $20,437 2018 2017 Consolidated Balance Sheet At December 31, $ millions Current assets Cash and cash equivalents Marketable securities Accounts receivable, net Prepaid expenses and other current assets Total current assets $10,019 $8,079 31,095 33,632 7,359 5,832 1,779 1,020 50,252 48,563 24,683 13,721 1,294 1,884 18,301 18,221 $2,576 $2,135 $97,106 $84,524 Property and equipment, net Intangible assets, net Goodwill Other assets Total assets Current liabilities $820 $380 541 390 Accounts payable Partners payable Accrued expenses and other current liabilities Deferred revenue and deposits 5,509 2,892 147 98 Total current liabilities Other liabilities 7,017 6,190 13,207 3,760 6,417 10,177 Total liabilities Stockholders' equity Common stock and additional paid-in capital Accumulated other comprehensive loss Retained earnings Total stockholders' equity Total liabilities and stockholders' equity 42,906 40,584 (760) (227) 41,753 33,990 83,899 74,347 $97,106 $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 53.27%. a. Compute ROE. Note: Round percentage to two decimal places (for example, enter 6.66% for 6.6555%). X % ing a 22% b. Compute net non rating ob ns (NNO) for 2018 and 2017, net nonoperating expense (NNE), and the NNE as a percentage of NNO (NNEP), assu statutory tax rate. Note: Round NNEP percentage to two decimal places (for example, enter 6.66% for 6.6555%). 2018 NNO: $ 0 X million 2017 NNO: $ 0 X million 2018 NNE: $ 0 x million 2018 NNEP: 0 X % C. Compute FLEV and Spread. Note: For FLEV, round amount to four decimal places (for example, enter 6.7756 for 6.775555). Note: Round Spread percentage to two decimal places (for example, enter 6.66% for 6.6555%). 2018 FLEV: 0 2018: Spread: 0 X % 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 ROE + ( FLEV 0 % x + ( x Spread 0 x x 0 % x ) = 0% X 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%). 0 X % 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 $54,163 Costs and expenses Cost of revenue Research and development Marketing and sales General and administrative Total costs and expenses Income from operations Interest and other income (expense), net Income before provision for income taxes Provision for income taxes 9,355 10,273 7,846 3,451 30,925 23,238 448 23,686 3,249 Net income $20,437 2018 2017 Consolidated Balance Sheet At December 31, $ millions Current assets Cash and cash equivalents Marketable securities Accounts receivable, net Prepaid expenses and other current assets Total current assets $10,019 $8,079 31,095 33,632 7,359 5,832 1,779 1,020 50,252 48,563 24,683 13,721 1,294 1,884 18,301 18,221 $2,576 $2,135 $97,106 $84,524 Property and equipment, net Intangible assets, net Goodwill Other assets Total assets Current liabilities $820 $380 541 390 Accounts payable Partners payable Accrued expenses and other current liabilities Deferred revenue and deposits 5,509 2,892 147 98 Total current liabilities Other liabilities 7,017 6,190 13,207 3,760 6,417 10,177 Total liabilities Stockholders' equity Common stock and additional paid-in capital Accumulated other comprehensive loss Retained earnings Total stockholders' equity Total liabilities and stockholders' equity 42,906 40,584 (760) (227) 41,753 33,990 83,899 74,347 $97,106 $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 53.27%. a. Compute ROE. Note: Round percentage to two decimal places (for example, enter 6.66% for 6.6555%). X % ing a 22% b. Compute net non rating ob ns (NNO) for 2018 and 2017, net nonoperating expense (NNE), and the NNE as a percentage of NNO (NNEP), assu statutory tax rate. Note: Round NNEP percentage to two decimal places (for example, enter 6.66% for 6.6555%). 2018 NNO: $ 0 X million 2017 NNO: $ 0 X million 2018 NNE: $ 0 x million 2018 NNEP: 0 X % C. Compute FLEV and Spread. Note: For FLEV, round amount to four decimal places (for example, enter 6.7756 for 6.775555). Note: Round Spread percentage to two decimal places (for example, enter 6.66% for 6.6555%). 2018 FLEV: 0 2018: Spread: 0 X % 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 ROE + ( FLEV 0 % x + ( x Spread 0 x x 0 % x ) = 0% X 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%). 0 X %