Nucor Corporation produces steel and steel products at its eight mills and is a

Question

Nucor Corporation produces steel and steel products at its eight mills and is a major recycler of scrap metal. The following data relate to Nucor for four years. Nucor Corporation ($ in millions) 2011 2012 2013 2014 Total assets $ 14,570.4 $ 14,152.1 $ 15,203.3 $ 15,615.9 Common stockholders’ equity 7,706.6 7,885.4 7,910.3 8,075.1 Total debt 4,282.0 3,660.1 4,409.9 4,584.4 Sales 19,429.3 19,052.0 21,105.1 Net income 593.1 585.5 815.8 Interest expense 162.4 146.9 169.3 Income tax rate 0.37 0.37 0.37 Required: Calculate Nucor’s ROA for 2012, 2013, and 2014. Decompose ROA into operating profit margin and asset turnover components. Has Nucor’s profitability changed over the three years? Calculate the rate of return on common stockholders’ equity for 2012, 2013, and 2014.

Explanation / Answer

Hope this answer will help if you have any query than please ask it in comments and rate it if helpful

Nucor Corporation ($ in millions) 2011 2012 2013 2014 Total assets $ 14570.4 $ 14152.1 $ 15203.3 $ 15615.9 Common stockholders’ equity 7706.6 7885.4 7910.3 8075.1 Total debt 4282 3660.1 4409.9 4584.4 Sales 19429.3 19052 21105.1 Net income 593.1 585.5 815.8 Interest expense 162.4 146.9 169.3 Income tax rate 0.37 0.37 0.37 Income before Tax = Net income / (1-t) 941.4286 929.3651 1294.921 Tax expense 348.3286 343.8651 479.1206 Solution (a) 2012 2013 2014 ROA (Net Income+Interest+Tax) / (Total Assets) (593.1+162.4+348.33) / (14152.1) (585.5+343.87+146.9)/(15203.3) (815.8+169.3+479.12) / (15615.9) 7.80% 7.08% 9.38% Operating Income       1,103.83 1,076.27 1464.22 ROA (OP Margin * Assets Turnover) OP ratio =(OP/Sales) (1103.83/19429.3) (1076.27/19052) (1464.22/21105.1) 5.68% 5.65% 6.94% Assets turnover = (Sales/Total Assets) (19429.3/14152.1) (19052/15203.3) (21105.1/15615.9) 1.37289166 1.253149 1.351514 (OP Margin * Assets Turnover) (5.68*1.373) (5.65*1.253) (6.94*1.352) 7.80% 7.08% 9.38% Solution(b) Yes the profitability is changed over the three years Solution © Rate of Return on Company stockholders (Net income / Equity) (593.1/7885.4) (585.5/7910.3) (815.8/8075.1) 7.52% 7.40% 10.10%

Related Questions

Navigate

• Browse (All)
• Browse N
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.