My numbers are not correct. The ROE should = PM x AT x FL and they don't.

Name Exam 3d Module 4 Instructions for Completing Part 2 of All Exams. 1. Start with the Test Part 2 file. 2. Save the file with a new name. Use: Your Last Name, Week Number and Part Number. For Example - McDevitt Week 4 Part 2 3. All answers should follow the question in the order given. 4. You may use Excel or pencil and paper to answer questions. BUT the answers must be embedded in the original file. 5. There is an application called \"Snipping Tool\" for PC's that allows you to take pictures of anything on the computer screen and then copy them to a new destination. 6. Hand written answers can be photographed and sent as pics to your computer, then copied into the file. 7. You may have another way of accomplishing this, so share it on the Discussion Board for this week's homework. 8. Upload the completed file to your Moodle Shell Name Exam 3d Module 4 Problem 1 Use the following selected balance sheet and income statement data for Valero Energy Corporation (in $ millions) to compute a) return on equity, b) profit margin (PM), c) asset turnover (AT), and d) financial leverage (FL) for fiscal 2013. Show that ROE = PM AT FL. a. ROE = Net income / average stockholder's equity a. 138,074 / (19,460 + 18,032 = 37,762 / 2 = 18,881 i. 137,709 / 18881 = 7.31 b. PM = net profit / Revenue a. 137,709 / 138,074 = 0.997 i. PM = 1.01% c. AT = revenues / average NOA (NOA = operating assets - operating liabilities) a. 138,074 / (47,260 - 2,720 = 44540) + (44,477 - 2,090 = 42,387) = 86927 i. Average NOA = 43,463.5 ii. 138,074 / 43,463.5 = 3.18 d. FL = assets / stockholder's equity a. 47,260 / 19,460 = 2.43 e. Show that ROE = PM AT FL (Millions of Dollars) 2013 2012 Operating revenues $138,074 $ 139,250 365 313 2,720 2,090 Total assets 47,260 44,477 Total Valero stockholders' equity 19,460 18,032 37% 37% Interest expense (non-operating expense) Net income attributable to Valero stockholders Statutory tax rate Name Exam 3d Module 4 Problem 2 Income statements and balance sheets follow for The New York Times Company. Refer to these financial statements to answer the requirements. The New York Times Company Consolidated Statements of Income Fiscal year ended (in thousands) Dec. 29, 2013 Dec. 30, 2012 Circulation $ 824,277 $ 795,037 Advertising 666,687 711,829 86,266 88,475 1,577,230 1,595,341 92,886 106,381 Wages and benefits 332,085 331,321 Other 201,942 213,616 Total production costs 626,913 651,318 Selling, general and administrative expenses 706,354 711,112 78,477 78,980 1,411,744 1,441,410 Pension settlement expense 3,228 47,657 Multiemployer pension plan withdrawal expense 6,171 0 0 2,620 156,087 103,654 Gain on sale of investments 0 220,275 Impairment of investments 0 5,500 Operating revenues Other Total revenues Production Costs Raw materials Depreciation and amortization Total operating costs Other expense Operating profit (Loss)/income from joint ventures Premium on debt redemption (3,215) 2,936 0 0 Interest expense, net 58,073 62,808 Income from continuing operations before income taxes 94,799 258,557 Income tax expense 37,892 94,617 Name Exam 3d Module 4 Income from continuing operations 56,907 163,940 (20,413) (113,447) 28,362 85,520 7,949 (27,927) 64,856 136,013 Discontinued operations: (Loss) from discontinued operations, net of tax Gain on sale, net of tax Income/(loss) from discontinued operations, net of tax Net income/(loss) Net (income)/loss attributable to the noncontrolling interest Net income/(loss) attributable to New York Times Company common stockholders 249 65,105 (166) 135,847 Name Exam 3d Module 4 The New York Times Company Consolidated Balance Sheets As of (in thousands) Dec. 29, 2013 Dec. 30, 2012 Cash and cash equivalents $ 482,745 $ 820,490 Short-term investments 364,880 134,820 Accounts receivable, net 202,303 197,589 Deferred income taxes 65,859 58,214 Prepaid assets 20,250 23,085 Other current assets 36,230 26,320 Assets held for sale 0 137,050 Total current assets 1,172,267 1,397,568 176,155 4,444 40,213 40,872 Property plant and equipment, net 713,356 773,469 Goodwill, net 125,871 122,691 Deferred income taxes 179,989 302,212 Miscellaneous assets 164,701 166,214 $2,572,552 $2,807,470 $ 90,982 $ 88,990 Accrued payroll and other related liabilities 91,629 86,772 Unexpired subscriptions 58,007 57,336 107,755 118,753 138 38,932 Liabilities held for sale 0 32,373 Total current liabilities 348,511 423,156 Long-term debt and capital lease obligations 684,142 696,752 Pension benefits obligation 444,328 737,889 Long-term marketable securities Investments in joint ventures Total assets Accounts payable Accrued expenses Accrued incomes taxes Name Exam 3d Module 4 Postretirement benefits obligation Other Total other liabilities 90,602 110,347 158,435 173,690 1,377,507 1,718,678 15,129 15,027 82 82 33,045 25,610 1,283,518 1,230,450 Stockholders' equity Common stock of $0.10 par value: Class A common stock Class B convertible Additional paid-in capital Retained earnings Common stock held in treasury, at cost (86,253) (96,278) Accumulated other comprehensive income loss), net of tax (402,611) (512,566) Total New York Times Company stockholders' equity 842,910 662,325 3,624 3,311 846,534 665,636 $2,572,552 $2,807,470 Noncontrolling interest Total stockholders' equity Total liabilities and stockholders' equity Name Exam 3d Module 4 Required: a. Compute net operating profit after tax (NOPAT) for 2013 and 2012. Assume that combined federal and state statutory tax rates are 37% for both years. a. NOPAT for 2013 i. b. NOPAT for 2012 b. Compute net operating assets (NOA) for 2013 and 2012. c. Compute return on net operating assets (RNOA) for 2013 and 2012. Net operating assets are $412,630 thousand in 2011. d. Compute return on common shareholders equity (ROE) for 2013 and 2012. Stockholders' equity attributable to New York Times Company in 2011 is $506,360 thousand. e. What is nonoperating return component of ROE for 2013 and 2012? f. Comment on the difference between ROE and RNOA. What inference do you draw from this comparison? Name Exam 3d Module 4 Problem 3 Income statements and balance sheets follow for Snap-On Incorporated. Refer to these financial statements to answer the requirements. Snap-On Incorporated Consolidated Statements of Earnings (Amounts in millions) For the fiscal year ended 2013 Net sales Cost of goods sold Gross profit Operating expenses $ 3,056.5 2012 $ 2,937.9 (1,583.6) (1,547.9) 1,472.9 1,390.0 (1,012.4) (980.3) Operating earnings before financial services 460.5 409.7 Financial services revenue 181.0 161.3 Financial services expenses (55.3) (54.6) Operating income from financial services 125.7 106.7 Operating earnings 586.2 516.4 Interest expense (56.1) (55.8) (3.9) (0.4) Other income (expense) -- net Earnings before income taxes and equity earnings Income tax expense Earnings before equity earnings Equity earnings, net of tax Net earnings Net earnings attributable to noncontrolling interests Net earnings attributable to Snap-on Incorporated 526.2 460.2 (166.7) (148.2) 359.5 312.0 0.2 2.6 359.7 314.6 (9.4) $ 350.3 (8.5) $ 306.1 Name Exam 3d Module 4 Snap-On Incorporated Consolidated Balance Sheets Name Exam 3d Module 4 Fiscal Year End (Amounts in millions) Cash and cash equivalents 2013 $ 217.6 2012 $ 214.5 Trade and other accounts receivable - net 531.6 497.9 Finance receivables - net 374.6 323.1 Contract receivables - net 68.4 62.7 434.4 404.2 Deferred income tax assets 85.4 81.8 Prepaid expenses and other assets 84.2 84.8 1,796.2 1,669.0 392.5 375.2 57.1 110.4 Long-term finance receivables - net 560.6 494.6 Long-term contract receivables - net 217.1 194.4 Goodwill 838.8 807.4 Other intangibles - net 190.5 187.2 57.2 64.1 Total assets $ 4,110.0 $ 3,902.3 Notes payable and current maturities of long-term debt $ Inventories - net Total current assets Property and equipment - net Deferred income tax assets Other assets 113.1 $ 5.2 Accounts payable 155.6 142.5 Accrued benefits 48.1 50.6 Accrued compensation 95.5 88.3 Franchisee deposits 59.4 54.7 Other accrued liabilities 243.7 247.9 Total current liabilities 715.4 589.2 Long-term debt 858.9 970.4 Deferred income tax liabilities 143.8 127.1 41.7 48.4 135.8 260.7 84.0 87.5 1,979.6 2,083.3 Retiree health care benefits Pension liabilities Other long-term liabilities Total liabilities Name Exam 3d Module 4 Preferred stock - - Common stock 67.4 67.4 225.1 204.6 2,324.1 2,067.0 Additional paid-in capital Retained earnings Accumulated other comprehensive income (loss) Treasury stock at cost Total shareholders' equity attributable to Snap-on Inc. Noncontrolling interests Total shareholders' equity Total liabilities and shareholders' equity (44.8) (124.2) (458.6) (412.7) 2,113.2 1,802.1 17.2 16.9 2,130.4 1,819.0 $ 4,110.0 $ 3,902.3 Required: a. Compute the company's current ratio and quick ratio for fiscal 2013 and 2012. Comment on any observed trend. b. Compute the company's times interest earned and liabilities-to-equity ratio for 2013 and 2012. Comment on any observed trend. c. Summarize your findings in a conclusion about the company's liquidity and solvency. Do you have any concerns about the company's ability to meet its debt obligations? Name Exam 3d Module 4 Problem 4 Refer to Target's financial statements at the website below to answer the questions that follow: file:///C:/Users/McDevitt/Desktop/UMO/ACC%20610%20FA%202016/Target%20Financial %20Statements.pdf (financial statements start on page 32.) In the event that you cannot find the information you need to answer the question, indicate what information is missing and why you need it. 1. In footnote number 1, the company refers to \"fiscal year\". Explain that paragraph to someone reading financial statements for the first time. Explain why the fiscal year end date changes. a. 2. Summarize what is being disclosed in footnote 7 \"Canada Exit\". Do you think this disclosure is important to an investor? Why or why not? 3. Compute the current ration and quick ratio for the three years presented in the financial statements. Show all computational work. 4. Compute times interest earned and the liabilities to equity ratios for each of the three years presented. (Check out the footnotes for Interest expense.) Comment on any noticeable change. Comment on any noticeable change. 5. Compute net operating profit in 2015 after tax (NOPAT). You will find the 2015 effective tax rate in the footnotes to the financial statements. Would it be prudent to compare the 2015 result to the 2013 or 2014 NOPAT? 6. Compute the return on equity for 2015. Comment. 7. Calculate the Gross Profit Percentage for the three years presented. Is there a trend? 8. Using the information you gathered above, would you recommend that your parents buy Target stock? Clearly outline why or why not