Reference no: EM131764156

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.