step by step solution

b) Below is the reformulated financial statement for BP plc: Reformulated Income Statement for the year ended 31/03/2019 2019 32000 15232 16768 2500 Sales less: Cost of Sales Gross profit less: Advertising expenses General and Administrative Expenses Other expenses Operating Income from sales (before tax) less: Tax Operating income from sales (after tax) Equity income from subsidiaries Operating income less: Net Financial Expense (after tax) Earnings 8145 102 6021 1972 4049 668 4717 750 3967 Summary reformulated Balance Sheets are as follows: 2019 2018 22500 6623 Net Operating Assets Net Financial Obligation Common Shareholders' Equity 24000 6800 17200 15877 For following questions, use average Balance Sheet figures: () Using the first level decomposition approach, calculate the Return on Common Equity (ROCE) and discuss your result (10 marks) Calculate the Return on Common Equity using the first level of decomposition approach if the Return on Net Operating Assets (RNOA fell to 3%. Discuss your new result. (10 marks) (iii) Calculate the the Return on Net Operating Assets ratio using the second level decomposition approach, and discuss your result. (5 marks) (iv) Calculate the Gross Profit Margin, Operating Profit from Sales Margin and Operating Profit Margin, and discuss your result