Return on net operating assets (RNOA)

Return on net operating assets (RNOA) is a common metric. Answer the following questions and label your answer well. 1. Examine Molson Coors income statements for 2013 and 2012 and the relevant notes to the financial statements. a. Identify items that you consider “nonoperating.” Explain each item briefly. b. Calculate the total after-tax amount of the nonoperating items you identified. To simply this calculation, assume that the company’s three-year marginal tax rate (federal, state and foreign) of 12% applies to nonoperating items in both years. Note: some nonoperating items are reported net of tax on the income statement. Use the marginal tax only for the items that are reported “before tax” on the income statement. c. Calculate net operating profit after tax (NOPAT) for 2013 and 2012. Hint: net operating profit after tax is calculated as net income before the effect of the after-tax amount of nonoperating items. 2. Examine Molson Coors balance sheets 2013 and 2012. Footnotes to the financial statements (not included with the case) reveal that the notes receivable (and the current portion thereof) relate to loans made to customers. a. Identify assets and liabilities that you consider “nonoperating.” Explain each item briefly. b. Calculate net operating assets (NOA) for 2013 and 2012. 3. Calculate Molson Coors’ return on net operating assets (RNOA) for 2013 and 2012. Compare the two returns. Note: to simplify the analysis, use year-end values for net operating assets rather than averages. 4. Compute the net operating profit margin (NOPM) and net operating asset turnover (NOAT) components of Molson Coors’ RNOA for 2013 and 2012. Use the components to explain the change in RNOA from 2013 to 2012. Note: 1) to simplify the analysis, use year-end values for net operating assets rather than averages; 2) use “Net sales” not “Sales” to compute ratios.