Question - Disaggregate Traditional DuPont ROE
Selected balance sheet and income statement information for Oracle Corporation follows. (Perform the required computations from the perspective of an Oracle shareholder.
$ millions
May 31, 2015 May 31, 2014
Operating assets $56,535 $51,447
Non-operating assets 54,368 38,819
Total assets 110,903 90,266
Operating liabilities 19,847 18,722
Non-operating liabilities 41,958 24,097
Total liabilities 61,805 42,819
Total Oracle stockholders' equity 48,663 46,878
Total revenues 38,226
Operating income before tax 13,871
Non-operating expense before tax 1,037
Tax expense 2,896
Net income9,938
a. Compute return on equity (ROE).
b. Apply the DuPont disaggregation into return on assets (ROA) and financial leverage (FL).
c. Calculate the profitability and productivity components of ROA.