Identifying Operating and Nonrecurring Income Components Following is the The Dow Chemical Company income statement....

80.2K

Verified Solution

Question

Accounting

Identifying Operating and Nonrecurring Income Components

Following is the The Dow Chemical Company income statement.

($ millions) For Year Ended December 31 2014 2013
Net sales $58,167 $57,080
Cost of sales 47,464 47,594
Research and development expenses 1,647 1,747
Selling, general, and administrative expenses 3,106 3,024
Amortization of intangibles 436 461
Goodwill and other intangible asset impairment losses 50 -
Restructuring charges (credits) (3) (22)
Asbestos-related charge 78 -
Equity in earnings of nonconsolidated affiliates 835 1,034
Sundry income (expense)net (27) 2,554
Interest income 51 41
Interest expense and amortization of debt discount 983 1,101
Income before income taxes 5,265 6,804
Provision for income taxes 1,426 1,988
Net income $3,839 $4,816

Required

a. Identify the components in its statement that you would consider operating. b. Identify those components that you would consider nonrecurring.

($ millions) For Year Ended December 31 a. b.
2014 2013 Operating? Nonrecurring?
Net sales $58,167 $57,080 AnswerYesNo

AnswerYesNo

Cost of sales 47,464 47,594 AnswerYesNo

AnswerYesNo

Research and development expenses 1,647 1,747 AnswerYesNo

AnswerYesNo

Selling, general, and administrative expenses 3,106 3,024 AnswerYesNo

AnswerYesNo

Amortization of intangibles 436 461 AnswerYesNo

AnswerYesNo

Goodwill and other intangible asset impairment losses 50 - AnswerYesNo

AnswerYesNo

Restructuring charges (credits) (3) (22) AnswerYesNo

AnswerYesNo

Asbestos-related charge 78 - AnswerYesNo

AnswerYesNo

Equity in earnings of nonconsolidated affiliates 835 1,034 AnswerYesNo

AnswerYesNo

Sundry income (expense)net (27) 2,554 AnswerYesNo

AnswerYesNo

Interest income 51 41 AnswerYesNo

AnswerYesNo

Interest expense and amortization of debt discount 983 1,101 AnswerYesNo

AnswerYesNo

Income before income taxes 5,265 6,804
Provision for income taxes 1,426 1,988 AnswerYesNo

AnswerYesNo

Net income $3,839 $4,816

c. Compute net operating profit after taxes (NOPAT) and net operating profit margin (NOPM) for each year. Assume a statutory tax rate of 35%.

2014 2013
NOPAT (Round your answer to the nearest million dollar.) $ ? million

$ ? million

NOPM (Round your answer to one decimal place.)

? %

? %

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students