Question

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	May 31, 2015	May 31, 2014
Operating assets	$52,091	$47,003
Nonoperating assets	54,368	38,819
Total assets	106,459	85,822
Operating liabilities	19,725	18,600
Nonoperating liabilities	41,958	24,097
Total liabilities	61,683	42,697
Total Oracle stockholders' equity	44,776	43,125
Total revenues	38,104
Operating income before tax	13,538
Nonoperating expense before tax	1,037
Tax expense	3,520
Net income	8,981

Compute return on net operating assets (RNOA)
Round answers to two decimal places (percentage ex: 0.12345 = 12.35%)

Answer 1

Solution:
	Particulars	Formula	Calculation for 2015	Results of 2015	Calculation for 2014	Results of 2014
	ROE	NetIncome/Total shareholders' equity	(8981/44776)*100	20.06%	(8981/43125)*100	20.83%
	ROA	Net Income/Total Assets	(8981/106459)*100	8.44%	(8981/85822)*100	10.46%
	RNOA	Net Income/Operating Assets	(8981/52091)*100	17.24%	(8981/47003)*100	19.11%
	Analysis:
	The ROE is decreased in 2015
	The ROA is decreased in 2015
	The RNOA is decreased in 2015
	Assumption:
	It is assumed that the net income remain same in 2014 and 2015.