| 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| 1. Please gather data from Nintendo’s financial statements and fill in the blanks below. Derive ROE using a five-way DuPont. | |||||||||||||||||||||
| five-way Dupont Analysis | |||||||||||||||||||||
| In Million $ | 2015 | 2016 | 2017 | 2015 | 2016 | 2017 | |||||||||||||||
| d | Net Sales | 5002.99 | 4187.01 | 4304.03 | Interest Burden | 1 | 1 | 1 | |||||||||||||
| EBIT | 225.41 | 272.92 | 258.39 | Tax Burden | 41.9% | 40.4% | 10.6% | ||||||||||||||
| Total Assets | 12311.79 | 10764.29 | 12927.01 | Operating Income Margin | 4.51% | 6.52% | 6.00% | ||||||||||||||
| Total Liabilities | 1687.02 | 1128.81 | 1918.44 | Assets Turnover | 40.6% | 38.9% | 33.3% | ||||||||||||||
| Interest Expense | – | – | – | Ave. Assets | 12687.95 | 11538.04 | 11845.65 | ||||||||||||||
| Effective Tax Rate | 41.9% | 40.4% | 10.6% | Ave. Equity | 10904.57 | 10130.12 | 10322.01 | ||||||||||||||
| Financial Leverage | 1.16 | 1.14 | 1.15 | ||||||||||||||||||
| ROE | 0.9% | 1.2% | 0.2% | ||||||||||||||||||
| Return on Equity | 3.6% | 1.4% | 8.2% | ||||||||||||||||||
| What is the trend of Nintendo’s ROE from 2015 to 2017? | |||||||||||||||||||||
| What is driving Nintendo’s ROE? Is this favorable or not? Explain. | |||||||||||||||||||||
| a) Given the empty cells below on Nintendo, gather data from their financial statements and compute for the the debt ratios below: | |||||||||||||||||||||
| In Million $ | 2015 | 2016 | 2017 | ||||||||||||||||||
| Cash and Cash Equivalents | 8329.16 | 7547.52 | 8325.42 | ||||||||||||||||||
| Short-term Debt | 1312.51 | 817.03 | 1620.16 | ||||||||||||||||||
| Long-term Debt | 374.51 | 311.77 | 298.28 | ||||||||||||||||||
| Common Equity | 10624.76 | 9635.48 | 11008.55 | ||||||||||||||||||
| Total Assets | 12311.79 | 10764.29 | 12927.01 | ||||||||||||||||||
| Debt-to-Assets (%) | 14% | 10% | 15% | ||||||||||||||||||
| Debt-to-Equity (x) | 16% | 12% | 17% | ||||||||||||||||||
| Long-term Debt-to-Equity (x) | 4% | 3% | 3% | ||||||||||||||||||
| Net Debt-to-Equity (x) | -0.63 | -0.67 | -0.58 | ||||||||||||||||||
| b) What do the debt ratios say about Nintendo’s debt position? Do all four ratios give the same message? | |||||||||||||||||||||
| c) What is the advantage/disadvantage of net debt-to-equity over the other debt sustainability ratios? |
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