Compute, Disaggregate, and Interpret RNOA of Competitors
Selected balance sheet and income statement information for the clothing retailers, Abercrombie & Fitch and The GAP, Inc., follows.
|
Company
($ millions)
|
Ticker
|
2011
Sales
|
2011
NOPAT
|
2011
Net Operating Assets
|
2010
Net Operating Assets
|
|
Abercrombie & Fitch
|
ANF
|
$3,469
|
$152
|
$1,032
|
$1,055
|
|
The GAP
|
GPS
|
$14,664
|
$1,195
|
$2,419
|
$2,318
|
(a) Compute the 2011 return on net operating assets (RNOA) for each company. (Do not round until your final answer. Round your answers to two decimal places.) (Do not use X NOAT to calculate.)
|
Company
($ millions)
|
RNOA
|
|
Abercrombie & Fitch
|
Answer%
|
|
The GAP
|
Answer%
|
(b) Disaggregate RNOA into net operating profit margin (NOPM) and net operating asset turnover (NOAT) for each company. (Do not round until your final answer. Round your answers to two decimal places.)
|
Company
|
NOPM
|
NOAT
|
|
Abercrombie & Fitch
|
Answer%
|
Answer |
|
The GAP
|
Answer%
|
Answer |
(c) Which of the following statements about business models bests explains differences between the RNOA for ANF and GPS?
GPS reports a higher RNOA because it is a much larger company.
GPS reports a lower RNOA because its asset turnover rate is substantially lower than ANF's.
GPS reports a higher RNOA because both its net operating profit margin and operating asset turnover are higher than ANF.
ANF reports a higher RNOA because its NOA is about one-fourth that for GPS.