help in homework

New User?

Fill This Form To Receive Instant Help

Help in Homework
trustpilot ratings
google ratings


Homework answers / question archive / Compute, Disaggregate, and Interpret RNOA of Competitors Halliburton and Schlumberger compete in the oil field services sector

Compute, Disaggregate, and Interpret RNOA of Competitors Halliburton and Schlumberger compete in the oil field services sector

Management

Compute, Disaggregate, and Interpret RNOA of Competitors Halliburton and Schlumberger compete in the oil field services sector. Refer to the following 2018 financial data for the two companies to answer the requirements. 
$ millions HAL SLB Total revenue 528,794 784 2,071 29,201 7,066 22% 18.56% 539,378 511 2,721 84,795 19,799 19% 5.86% Pretax net nonoperating expense Net income Average operating assets Average operating liabilities Marginal tax rate Return on equity 
a. Compute return on net operating assets (RNOA) for each company. 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 answers to two decimal places (percentage example: 0.12345 = 12.35%). 
 

pur-new-sol

Purchase A New Answer

Custom new solution created by our subject matter experts

GET A QUOTE

Answer Preview

a) Computation of Return on Net Operating Assets (RNOA):

Return on Net Operating Assets (RNOA) = Net Operating Income after tax / Average Net Operating Assets

Here,

Computation of Net Operating Profit after Tax Amount Amount
Particulars HAL SLB
Net Income (after tax) 2,071 2,721
Marginal Tax Rate 22% 19%
Net Income (before tax) 2,655 3,359
 
(Net Income (after tax)*1/(1-Tax Rate)
Add : Pretax Net non-operating Expense 784 511
Net Operating Income before tax 3,439 3,870
Marginal Tax Rate 22% 19%
Less: Tax Expense (Net Operating Income*before tax*Marginal Tax Rate) 757 735
Net Operating Income after tax 2,683 3,135
     
Average Net Operating Assets HAL SLB
Average Operating Assets 29,201 84,795
Average Operating Liability 7,066 19,799
Average Net Operating Assets 22,135 64,996

 

For HAL = 2,683/22,135 = 12.12%

For SLB = 3,135/64,996 = 4.82%

 

b) Disaggregate RNOA into net operating profit margin (NOPM) and net operating asset turnover (NOAT) for each company:

Net Operating Profit Margin (NOPM) = Net Operating Profits after tax/ Total Revenue

For HAL = 2,683/$28,794 = 9.32%

For SLB = 3,135/$39,378 = 7.96%

 

Net Operating Asset Turnover (NOAT) = Total Revenue/ Average Net Operating Assets

For HAL = 28,794/22,135 = 1.30 times

For SLB = 39,378/64,996 = 0.61 times

 

Sitejabber (5.0)

BBC (5.0)

Trustpilot (4.9)

Google (5.0)