Question

1. Mattel Inc.’s 2016 financial statements show operating profit before interest and tax of $519,233 thousand, net income of $318,022 thousand, provision for income taxes of $91,720 thousand and net nonoperating expense before tax of $109,491 thousand. Assume Mattel’s statutory tax rate for 2016 is 37%.

-Mattel’s 2016 effective tax rate is:

2. The fiscal 2016 financial statements of Nike Inc. shows net operating profit margin (NOPM) of 11.4%, net operating asset turnover (NOAT) of 3.83, return on equity of 30.1%, and adjusted return on assets of 17.1%.

-What is the company’s nonoperating return?

3.The fiscal year-end 2016 financial statements for Walt Disney Co. report revenues of $55,632 million, net operating profit after tax of $9,954 million, net operating assets of $58,603 million. The fiscal year-end 2015 balance sheet reports net operating assets of $59,079 million.

-Walt Disney’s 2016 net operating profit margin is:

Answer 1

Question no:1

Computation of Mattel’s 2016 effective tax rate

Effective tax rate = Provision for Income taxes /Income before tax   *100

Income before income tax = net Income + provision for income tax =$318,022 Thousand +$91,720 Thousand =$409,742 Thousand

Effective tax rate = $91720 Thousand /$409742 Thousand *100 =22.38%

Question no:2

Computation of company’s nonoperating return

Return on equity = Return on Operating Assets + Non Operating return

Non operating return = return on equity + (net operating profit margin*net operating asset turnover)

Non operating return = 30.10% - (11.4% *3.83) =30.10% - 43.66% = -13.56%