Nonoperatingreturn = FLEV Spread 2009: 1.84 10.0% = 18.4% 2008: 2.15 9.9% = 21.3% (Note the rounding difference from 21.4% in h, above) j. NordstromTJX Return on equity 31.7% 48.3% RNOA13.3% 38.3%

NOPM6.1% 6.1%

NOAT2.18 6.28

Nonoperatingreturn 18.4% 10.1%

FLEV1.84 0.29 Spread10.0% 34.9%

Thenonoperatingreturns for the two companies differ significantly with Nordstromsnonoperatingreturn of 18.4% nearly double that of TJX (10.1%) due to differences in the degree of financial leverage between the two companies. Nordstroms FLEV of 1.84 is about six times as high as TJXs at 0.29. TJX has very little debt whereas Nordstrom has significant short and long-term debt levels. Both companies have the same level ofnonoperatingexpenses tononoperatingobligations (3.3% at Nordstrom and 3.4% at TJX), which implies that the two companies have the same cost of debt capital. But TJX does not borrow much and, thus, does not earn a significantnonoperatingreturn for its shareholders.

What general conclusioncan be drawn from theseresults?