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Analysis and Interpretation of Ratios When RNOA Exceeds ROE Refer to the balance sheets and income statement below for Facebook Inc.

FACEBOOK INC.
Consolidated Statement of Income
For Year Ended December 31, $ millions	2018
Revenue	$55,838
Costs and expenses
Cost of revenue	9,355
Research and development	10,273
Marketing and sales	7,846
General and administrative	3,451
Total costs and expenses	30,925
Income from operations	24,913
Interest and other income (expense), net	448
Income before provision for income taxes	25,361
Provision for income taxes	3,249
Net income	$22,112

FACEBOOK INC.
Consolidated Balance Sheet
At December 31, $ millions	2018	2017
Current assets
Cash and cash equivalents	$10,019	$8,079
Marketable securities	31,095	33,632
Accounts receivable, net	7,587	5,832
Prepaid expenses and other current assets	1,779	1,020
Total current assets	50,480	48,563
Property and equipment, net	24,683	13,721
Intangible assets, net	1,294	1,884
Goodwill	18,301	18,221
Other assets	$2,576	$2,135
Total assets	$97,334	$84,524
Current liabilities
Accounts payable	$820	$380
Partners payable	541	390
Accrued expenses and other current liabilities	5,509	2,892
Deferred revenue and deposits	147	98
Total current liabilities	7,017	3,760
Other liabilities	6,190	6,417
Total liabilities	13,207	10,177
Stockholders' equity
Common stock and additional paid-in capital	42,906	40,584
Accumulated other comprehensive loss	(760)	(227)
Retained earnings	41,981	33,990
Total stockholders' equity	84,127	74,347
Total liabilities and stockholders' equity	$97,334	$84,524

Use these financial statements to answer the requirements. Required PLEASE ANSWER THE QUESTIONS WITH RED X.

a. Compute net operating profit after tax (NOPAT) for 2018. Assume that the combined federal and state statutory tax rate is 22%. Hint: Carefully consider whether nonoperating expense is positive or negative. Note: Round answer to the nearest million. $ 21,205 * ($ millions) b. Compute net operating assets (NOA) for 2018 and 2017. NOA for 2017: 40,715 X NOA for 2018: 43,013 c. Compute RNOA and disaggregate it into net operating profit margin (NOPM) and net operating asset turnover (NOAT) for 2018. Note: For NOPM and RNOA, round percentages to two decimal places (for example, enter 6.66% for 6.6555%). Note: For NOAT, round amount to four decimal places (for example, enter 6.7756 for 6.775555). NOPM X NOAT = RNOA 38.36 % x x 1.1803 X = 45.28 % X d. Compute return on equity (ROE) for 2018. Note: Round percentage to two decimal places (for example, enter 6.66% for 6.6555%). 27.91 %

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