And nonoperating components is a useful analysis tool

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and nonoperating components is a useful analysis tool. [Source: Soliman. loIarl< T., Use of DuPont Analysis by Market Participants (October 2007). SSRN: ssrn.corn/abstracte t t 01981.]
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3-15 Module 3 I Profitability Analysis and Interpretation MID-MODULE REVIEW 2 Following is the balance sheet of Walmart. WALMART Balance Sheets (millions, except share data) Cash and cash equivalents . Receivables, net . Inventories . Prepaid expenses and other . Current assets of discontinued operations . Total current assets . Property and equipment Land . Buildings and improvements . Fixtures and equipment . Transportation equipment. . Construction in process . Property and equipment . Less accumulated depreciation . Property and equipment, net . Property under capital leases Property under capital leases . Less accumulated amortization . Property under capital leases, net . Goodwill . Other assets and deferred charges . Total assets . Short-term borrowings . Accounts payable . Accrued liabilities . Accrued income taxes . Long-term debt due within one year . Obligations under capital leases due within one year . Current liabilities of discontinued operations . Total current liabilities . Long-term debt . Long-term obligations under capital leases . Deferred income taxes and other . Redeemable noncontrolling interest. . Equity Preferred stock ( $0.10 par value; 100 shares authorized, none issued) .... : .. Common stock ( $0.1 0 par value; 11,000 shares authorized, 3,516 and 3,786 issued and outstanding at January 31, 2011 and 2010, respectively) . Capital in excess of par value . Retained earnings . Accumulated other comprehensive income (loss) . Total Walmart shareholders' equity . Noncontrolling interest . Total equity . Total liabilities and equity . Jan, 31, Jan. 31, 2011 2010 $ 7,395 $ 7,907 5,089 4,144 36,318 32,713 2,960 3,128 131 140 - 51,893 48,032 24,386 22,591 79,051 73,657 38,290 34,035 2,595 2,355 4,262 5,210 --- 148,584 137,848 (43,486) (38,304) 105,098 99,544 5,905 5,669 (3,125) (2,906) 2,780 2,763 16,763 16,126 4,129 3,942 -- $180,663 $170,407 $ 1,031 $ 523 33,557 30,451 18,701 18,734 157 1,347 4,655 4,050 336 346 47 92 -- 58,484 55,543 40,692 33,231 3,150 3,170 6,682 5,508 408 307 352 3,577 63,967 646 378 3,803 66,357 (70) 68,542 2,705 71,247 $180,663 70,468 2,180 72,648 $170,407 Required 1. Compute Walmart's net operating assets for its fiscal year-ends 2011 and 2010. ~ "2:' :'"~ 1B I(
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Module 3 I Profitability Analysis and Interpretation 3-16 2. Refer to Walmart's income statement and NOPATfrom Mid-Module Review 1. Compute Walmart's return on net operating assets (RNOA) for 201l. 3. Compute Walmart's 2011 ROE. What percentage ofWalmart's ROE comes from operations? -L Disaggregate Walmart's 2011 RNOA into net operating profit margin (NOPM) and net op- erating asset turnover (NOAT). Compare and contrast Walmart'sROE, RNOA, NOPM, and NOATwiththose same measures computed in this module for Target. Interpret the results. The solution is on page 3-50. her RNOA Disaggregation -e disaggregation of RNOA into net operating profit margin (NOPM) and net operating asset ver (NOAT) yields valuable insight into factors driving company performance, analysts and itors usually disaggregate those components even further. The purpose is to better identify the ific drivers of both profitability and turnover.
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