Identifying Operating and Nonrecurring Income Components Following is the The Dow Chemical Company income statement. (In...

Transcribed Image Text:

Identifying Operating and Nonrecurring Income Components Following is the The Dow Chemical Company income statement. (In millions, except per share amount) For Year Ended Net sales Cost of sales December 31 2010 2009 $54,674 $44,975 45,780 39,148 1,660 1,492 Research and development expenses Selling, general, and administrative expenses 2,609 2,487 Amortization of intangibles 509 399 Goodwill impairment losses 7 Restructuring charges 26 689 Purchased in-process research and development charges 7 Acquisition-related expenses 143 166 Asbestos-related credit 54 Equity in earnings of nonconsolidated affiliates 1,112 630 Sundry income-net 125 891 Interest income 37 39 Interest expense and amortization of debt discount 1,473 1,571 Income before income taxes 3,802 569 Provision for income taxes 481 (97) Net income from continuing operations 3,321 666 Discontinued operations 110 Net income $3,321 $776 Required a. Identify the components in its statement that you would consider operating. b. Identify those components that you would consider nonrecurring. (In millions, except per share amount) For Year Ended December 31 b. Net sales 2010 2009 Operating? Nonrecurring? $54,674 $44,975 Yes = No Cost of sales 45,780 39,148 Yes No Research and development expenses 1,660 1,492 Yes = No Selling, general, and administrative expenses 2,609 2,487 Yes No Amortization of intangibles 509 399 Yes = No Goodwill impairment losses 7 Yes Yes Restructuring charges 26 689 Yes = Yes Purchased in-process research and development charges 7 No Yes Acquisition-related expenses 143 166 No Yes Asbestos-related credit 54 Yes Yes Equity in earnings of nonconsolidated affiliates 1,112 630 Yes = No Sundry income-net 125 891 No No Interest income 37 Interest expense and amortization of debt discount 1,473 39 No 1,571 No No No Income before income taxes 3,802 569 Provision for income taxes 481 (97) Yes No Net income from continuing operations 3,321 666 Discontinued operations 110 Yes Net income $3,321 $776 c. Compute net operating profit after taxes (NOPAT) and net operating profit margin (NOPM) for each year. Assume a statutory tax rate of 35%. 2010 2009 NOPAT (Round your answer to the nearest million dollar.) $ NOPM (Round your answer to one decimal place.) 0 x $ 0% X 0 x 0% * Identifying Operating and Nonrecurring Income Components Following is the The Dow Chemical Company income statement. (In millions, except per share amount) For Year Ended Net sales Cost of sales December 31 2010 2009 $54,674 $44,975 45,780 39,148 1,660 1,492 Research and development expenses Selling, general, and administrative expenses 2,609 2,487 Amortization of intangibles 509 399 Goodwill impairment losses 7 Restructuring charges 26 689 Purchased in-process research and development charges 7 Acquisition-related expenses 143 166 Asbestos-related credit 54 Equity in earnings of nonconsolidated affiliates 1,112 630 Sundry income-net 125 891 Interest income 37 39 Interest expense and amortization of debt discount 1,473 1,571 Income before income taxes 3,802 569 Provision for income taxes 481 (97) Net income from continuing operations 3,321 666 Discontinued operations 110 Net income $3,321 $776 Required a. Identify the components in its statement that you would consider operating. b. Identify those components that you would consider nonrecurring. (In millions, except per share amount) For Year Ended December 31 b. Net sales 2010 2009 Operating? Nonrecurring? $54,674 $44,975 Yes = No Cost of sales 45,780 39,148 Yes No Research and development expenses 1,660 1,492 Yes = No Selling, general, and administrative expenses 2,609 2,487 Yes No Amortization of intangibles 509 399 Yes = No Goodwill impairment losses 7 Yes Yes Restructuring charges 26 689 Yes = Yes Purchased in-process research and development charges 7 No Yes Acquisition-related expenses 143 166 No Yes Asbestos-related credit 54 Yes Yes Equity in earnings of nonconsolidated affiliates 1,112 630 Yes = No Sundry income-net 125 891 No No Interest income 37 Interest expense and amortization of debt discount 1,473 39 No 1,571 No No No Income before income taxes 3,802 569 Provision for income taxes 481 (97) Yes No Net income from continuing operations 3,321 666 Discontinued operations 110 Yes Net income $3,321 $776 c. Compute net operating profit after taxes (NOPAT) and net operating profit margin (NOPM) for each year. Assume a statutory tax rate of 35%. 2010 2009 NOPAT (Round your answer to the nearest million dollar.) $ NOPM (Round your answer to one decimal place.) 0 x $ 0% X 0 x 0% *

Answer rating: 100% (QA)

To compute the Net Operating Profit After Taxes NOPAT and Net Opera... View the full answer