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    dawn
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    Nordstrom's financial metrics from 2012 to 2013 are presented. ROA increased from 8.6% in 2012 to 8.9% in 2013, while ROE increased from 8.6% to 8.9%. Profit margin decreased slightly from 6.5% to 6.2% while asset turnover increased from 1.32 to 1.42. The increasing ROA is likely due to Nordstrom using assets more efficiently to generate profits in 2013 compared to 2012, as total assets decreased while net income increased.

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    Financial Accounting for MBAs

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    Nordstrom's financial metrics from 2012 to 2013 are presented. ROA increased from 8.6% in 2012 to 8.9% in 2013, while ROE increased from 8.6% to 8.9%. Profit margin decreased slightly from 6.5% to 6.2% while asset turnover increased from 1.32 to 1.42. The increasing ROA is likely due to Nordstrom using assets more efficiently to generate profits in 2013 compared to 2012, as total assets decreased while net income increased.

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    13 views1 page

    Module 1 Problem 2

    Uploaded by

    dawn
    Nordstrom's financial metrics from 2012 to 2013 are presented. ROA increased from 8.6% in 2012 to 8.9% in 2013, while ROE increased from 8.6% to 8.9%. Profit margin decreased slightly from 6.5% to 6.2% while asset turnover increased from 1.32 to 1.42. The increasing ROA is likely due to Nordstrom using assets more efficiently to generate profits in 2013 compared to 2012, as total assets decreased while net income increased.

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    © All Rights Reserved
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    of 1

    MODULE 1 Problem 2

    Dawn Jones

    ($ millions)
    Sales
    Net Income
    Total Assets
    Equity

    2013
    11762
    735
    8089
    1913

    Answer
    A.
    ROA 2012
    ROA 2013

    Net Income/Average Equity


    683/(7462+8491)/2
    735/(8491+8089)/2
    Net Income/Average Assets
    683/(2021+1956)/2
    735/(1956+1913)/2

    ROE 2012
    ROE 2013
    B.
    Profitability (Profit Margin)

    Productivity (Asset turnover)

    15953
    16580

    7976.50 0.085627
    8290.00 0.088661

    8.6
    8.9

    3977
    3869

    1988.50 0.343475
    1934.50 0.379943

    34.3
    38.0

    0.065066
    0.062489

    6.50%
    6.20%

    7976.5 1.315991
    8290 1.418818

    1.32
    1.42

    0.085627
    0.088661

    8.6
    8.9

    Net Income/Sales
    2012 683/10497
    2013 735/11762

    Sales/Average assets
    2012 10497/(7462+8491)/2
    2013 11762/(8491+8089)/2

    15953
    16580

    Net Margin*Profit Margin


    2012 0.065066*1.315991
    2013 0.062489*1.418818
    C.

    For every dollar of average asset Nordstrom Inc.


    earned $1.32 of sales 2012 and $1.42 in 2013.
    ROA is higher now than last years, which could be
    better efficiency in using assets to generate profit
    during 2013 vs 2012. What appears to be driving
    Nordstrom, Inc.'s change in ROA over time is total
    assets.

    2012
    10497
    683
    8491
    1956

    2011
    9310
    613
    7462
    2021

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