Selected income statement and balance sheet data from Merck & Co. for Year 5 and Year 9 are reproduced below. Assume fixed assets and working capital are operating and a 50% tax rate. Using year end values for computations requiring an average.

Requirements

1. Calculate ROCE for year 5 and year 9.

2. Calculate RNOA for year 5 and year 9.

3. Calculate Leverage for year 5 and year 9.

4. Calculate Net financial rate (NFR) for year 5.

5. Calculate Spread for year 5.

Year 5 Year 9 $542 35 Income Statement Data Revenues .... Operating income. Interest expense. Pretax income Income taxes Net income... $979 68 0 7 28 14 14 68 34 34 Balance Sheet Data Long-term operating assets...... $ 52 Working capital ...... 123 Total liabilities...... 50 Total shareholders' equity ....... 125 $ 63 157 0 220 Year 5 Year 9 $542 35 Income Statement Data Revenues .... Operating income. Interest expense. Pretax income Income taxes Net income... $979 68 0 7 28 14 14 68 34 34 Balance Sheet Data Long-term operating assets...... $ 52 Working capital ...... 123 Total liabilities...... 50 Total shareholders' equity ....... 125 $ 63 157 0 220