Valero Energy, a petroleum company, reported net income of $1,803.8 on revenues of $54,618.6 for Year 4. Interest expense totaled $359.7, and preferred dividends totaled $12.5. Average total assets for Year 4 were $17,527.9. The income tax rate is 35 percent. Average preferred shareholders’ equity totaled $204.3, and average common shareholders’ equity totaled $6,562.3. All amounts are in millions.
a. Compute the rate of ROA. Disaggregate ROA into profit margin for ROA and assets turnover components.
b. Compute the rate of ROCE. Disaggregate ROCE into profit margin for ROCE, assets turnover, and capital leverage ratio components.
c. Calculate the amount of net income to common shareholders derived from the excess return on creditors’ capital, the excess return on preferred shareholders’ capital, and the return on common shareholders’ capital.