I posted this question already, chegg q and a expert said answer was 17.21% and
ID: 2821120 • Letter: I
Question
I posted this question already, chegg q and a expert said answer was 17.21% and that did not work!! The answer I computed myself did not work either as done in the screenshot.
a Screen Shot 2018-09-22 at 6.21.40 PM Search Compute and Compare ROE, ROA, and RNOA Selected balance sheet and income statement information for Oracle Corporation follows. (Perform the required computations from the perspective of an Oracle shareholder $ millions Operating assets Nonoperating assets Total assets May 31, 2015 May 31, 2014 $49,225 38,819 88,044 18,710 24,097 42,807 45,237 Screen Shot 2018-09-22 at 6.21.53 PM $54,313 54,368 108,681 19,835 41,958 61,793 46,888 38,214 13,816 1,037 3,868 8,911 a. Compute return on equity (ROE) Round answer to two decimal places (ex: 0.12345-12.35%) 19.35 Operating liabilities Nonoperating liabilities Total liabilities b. Compute return on net assets (ROA) Round answers to two decimal places (percentage ex: 0.12345-12.35%) 9.06 Total Oracle stockholders' equity C. Compute return on net operating assets (RNOA) Round answers to two decimal places (percentage ex: 0.12345-12.35%) Total revenues Operating income before tax Nonoperating expense before tax Tax expense Net income 31.44 Check You have correctly selected 2. a. Compute return on equity (ROE) Round answer to two decimal places (ex: 0.12345-12.35%) Partially correct Marks for this submission: 6.06/9.09 19.35Explanation / Answer
Average operating assets for 2014 and 2015 = (54313 + 49225 ) / 2
= 51769
NOPAT , net operating profit after tax = operating income before tax - tax expense
= 13816 - 3868
= 9948
RNOA = NOPAT/ Average operating assets
= 9948/ 51769
= 19.22%
In case this doesn't work, we can deduct average operating liabilities from average operating assets
Avg operating liabilities = (19835 + 18710 ) / 2 =19272.5
Avg Net operating assets = Avg operating assets - avg operating liabilities
= 51769 - 19272.5
= 32496.5
RNOA = NOPAT/ Avg net operating assets
= 9948 / 32496.5
= 30.61%