Homework

HOMEWORK 1

Income statements and balance sheets follow for The Washington Post Company. Refer to these

financial statements to answer the requirements.

a. Compute net operating profit after tax (NOPAT) for 2011 and 2010. Assume that combined federal and state statutory tax rates are 35% for both years.

b. Compute net operating assets (NOA) for 2011 and 2010.

c. Compute return on net operating assets (RNOA) for 2011 and 2010. Comment on the year-over-year change. Net operating assets are $2,495,075 thousand in 2009.

d. Disaggregate RNOA into profitability and asset turnover components (NOPM and NOAT, respectively). What explains the year-over-year change in RNOA?

THE WASHINGTON POST COMPANY CONSOLIDATED STATEMENTS OF INCOME |

| Fiscal year ended |

(in thousands) | Dec. 31, 2011 | Jan. 2, 2011 |

Operating revenues | | |

Education | $ 2,465,048 | $ 2,862,279 |

Advertising | 754,544 | 833,605 |

Circulation and subscriber | 856,457 | 857,290 |

Other revenue | 138,784 | 130,867 |

| 4,214,833 | 4,684,041 |

| | |

Operating expenses | 1,973,168 | 1,931,576 |

Selling, general and administrative expenses | 1,652,052 | 1,888,954 |

Depreciation and amortization | 281,732 | 273,372 |

Asset impairment | 11,923 | 27,477 |

Income from operations | 295,958 | 562,662 |

| | |

Equity in (losses) earnings of affiliates | 5,949 | (4,133) |

Interest income | 4,147 | 2,576 |

Interest expense | (33,226) | (30,503) |

Other nonoperating (expense) income, net | (55,200) | 7,515 |

Income from continuing operations before income taxes | 217,628 | 538,117 |

Provision for income taxes | 96,300 | 218,000 |

Income from continuing operations | 121,328 | 320,117 |

Loss from discontinued operations, net of tax | (4,171) | (42,097) |

Net income | 117,157 | 278,020 |

Net (income)loss attributable to noncontrolling interests | (7) | 94 |

Net...