Question

Compute ROE and RNOA with Disaggregation
Selected balance sheet and income statement information for Home Depot follows.

$ millions	Jan. 31, 2016	Feb. 01, 2015
Operating assets	$40,783	$38,673
Nonoperating assets	2,291	1,798
Total assets	43,074	40,471
Operating liabilities	15,068	13,577
Nonoperating liabilities	21,270	17,152
Total liabilities	36,338	30,729
Total stockholders' equity	6,736	9,742
Sales	89,464
Net operating profit before tax (NOPBT)	12,224
Nonoperting expense before tax	828
Tax expense	4,523
Net income	6,873

Round answers to two decimal places (ex: 0.12345 = 12.35%)

a. Compute return on equity.
Answer%

b. Compute return on net operating assets (RNOA).
Answer%

c. Use ROE and RNOA to determine the nonoperating return for the year.
Answer%

d. Disaggregate RNOA into components of profitability and productivity and show that the product of the two components equals RNOA.
NOPM Answer%
NOAT Answer
RNOA Answer%

Answer 1