Do the assigned questions using Malimash, Inc.s 2014 financial data below:

Malimash, Inc. 2014 Financial Data ($ millions)

Income Statement Data

Sales Revenue

$7,120.00

Depreciation

$230.00

Interest Expense

$10.00

Pretax Income

$2,550.00

Income Taxes

$900.00

Net Income

$1,650.00

Balance Sheet Data

Current Assets

$4,850.00

Fixed Assets, Net

$2,400.00

Total Assets

$7,250.00

Current Liabilities

$3,290.00

Long-Term Debt

$100.00

Shareholders' Equity

$3,860.00

Total Liabilities and Shareholders' Equity

$7,250.00

Required:

1. Calculate return on common equity for 2014 using year-end amounts and assuming no preferred dividends.
2. Disaggregate the ROCE into operating (RNOA) and non-operating components.
3. Comment on Mercks use of leverage. (Assume all assets and current liabilities are operating at a 35% tax rate).