Question

Selected balance sheet and income statement data follow for The New York Times Company for fiscal 2018 (in thousands).

2018 Net income attributable to New York Times common stockholders	2018 NOPAT	2018 Net operating assets	2017 Net operating assets	2018 Common equity	2017 Common equity
$35,000	$50,000	$500,000	$400,000	$800,000	$600,000

Use the data to calculate the company's nonoperating return

Answer 1

We can calculate the Non-operating return by the following formula,

Non-operating return = Return on equity (ROE) - Return on Net Operating Assets(RNOA)

ROE = Net income/Avg shareholder's equity

Net income = 35,000

Avg shareholder's equity = (600,000 + 800,000)/2 = 700,000

ROE = 35,000 / 700,000 = 0.05 or 5%

Return on Net Operating Assets(RNOA) = NOPAT/avg NOA

RNOA = 50,000/(500,000+400,000/2) = 0.11

Non operating return = ROE - RNOA = 0.05 - 0.111 = -6.11

Hence Non operating return = -6.11

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