The following are summary income statement and balance sheet numbers for a firm (in millions of dollars). The firm has a required return for operations of 9%
(a) Calculate the following numbers (and show working) for 2015. Use beginning-of-period balance sheet numbers in denominators.
A. Return on common equity (ROCE)
B. Return on net operating assets (RNOA)
C. Core return on net operating assets (Core RNOA)
D. Free cash flow
E. Net payments to common shareholders
F. Net payments to net debt holders
G. Asset turnover
H. Core profit margin
I. Growth rate for net operating assets
b)On the basis of these financial statements, forecast
A. Residual operating income for 2016 and 2017.
B. Abnormal operating income growth for 2017.