Question: Analysis of Profitability: The Coca-Cola Company (Easy) Here is a reformulated income statement for the Coca-Cola Company for 2007 (in millions):
Summary balance sheets for 2007 and 2006 are as follows (in millions):
For the following questions, use average balance sheet amounts.
a. Calculate return on net operating assets (RNOA) and net borrowing cost (NBC) for 2007.
b. Calculate financial leverage (FLEV).
c. Show that the financing leverage equation that explains the return on common equity (ROCE) holds for this firm.
d. Calculate the profit margin and asset turnover (ATO) for 2007 and show that RNOA = PMxATO.
e. Calculate the gross margin ratio, the operating profit margin ratio from sales, and the operating profit margin ratio.