Question 9

Compute NOPAT Selected income statement information for 2018 is presented below for Home Depot Inc. and Lowe's Companies Inc. Assume the statutory tax rate is 22%. Pretax Net Average Net Nonoperating Tax Operating Company ($ millions) Ticker Sales NOPBT Expense Expense Assets Home Depot HD $108,203 $15,530 $974 $3,435 $25,217 Lowe's LOW 71,309 4,018 624 1,080 20,326 Lowe's Home Depot 0 $ 0 a. Compute the following measures for both companies. Measure Rounding Instructions 1. Net operating profit (NOPAT) Round to nearest whole dollar 2. Return on net operating assets (RNOA) Round percentage to one decimal place 3. Net operating profit margin (NOPM) Round percentage to one decimal place 4. Net operating asset turnover (NOAT) Round amount to two decimal places 0 % 0 % 0 % 0% 0 0 b. Indicate which of these two companies: 1. Is more profitable (in $5). 2. Produces the higher profit margin (in %). Uses its NOA more efficiently. 4. Produces the higher return on NOA. Please answer all parts of the question. 3