QUESTION 31

1. Income statements and balance sheets follow for

Snap-On Incorporated. Refer to these financial
statements to answer the requirements.
Snap-On Incorporated
Consolidated Statements of Earnings
(Amounts in millions)
Net sales
Cost of goods sold
Gross profit
Operating expenses
Operating earnings before financial services
Financial services revenue
Financial services expenses
Operating income from financial services before
arbitration settlement
Arbitration settlement
Operating income from financial services
Operating earnings
Interest expense
Other income (expense) -- net
Earnings before income taxes and equity earnings
Income tax expense
Earnings before equity earnings
Equity earnings, net of tax
Net earnings
Net earnings attributable to noncontrolling
interests
Net earnings attributable to Snap-on Incorporated

For the fiscal year ended

2011
2010
$ 2,854.2
$ 2,619.2
(1,516.3)
(1,408.1)
1,337.9
1,211.1
(953.7)
(894.1)
384.2
317.0
124.3
62.3
(51.4)
(47.9)
72.9
18.0
90.9
475.1
(61.2)
(1.0)
412.9
(133.7)
279.2
4.6
283.8

14.4
-14.4
331.4
(54.8)
0.8
277.4
(87.6)
189.8
3.2
193.0

(7.5)
$ 276.3

(6.5)
$ 186.5

2.
Snap-On Incorporated
Consolidated Balance Sheets
(Amounts in millions
Cash and cash equivalents
Trade and other accounts receivable - net
Finance receivables - net
Contract receivables - net
Inventories - net
Deferred income tax assets
Prepaid expenses and other assets
Total current assets
Property and equipment - net
Deferred income tax assets

Fiscal year end

2011
2010
$ 185.6
$572.2
463.5
443.3
277.2
215.3
49.7
45.6
386.4
329.4
92.6
87.0
75.7
72.7
1,530.7
1,765.5
352.9
344.0
125.2
91.5

Long-term finance receivables - net

Long-term contract receivables - net
Goodwill
Other intangibles - net
Other assets
Total assets
Notes payable and current maturities of long-term
debt
Accounts payable
Accrued benefits
Accrued compensation
Franchisee deposits
Other accrued liabilities
Total current liabilities
Long-term debt
Deferred income tax liabilities
Retiree health care benefits
Pension liabilities
Other long-term liabilities
Total liabilities
Preferred stock
Common stock
Additional paid-in capital
Retained earnings
Accumulated other comprehensive income (loss)
Treasury stock at cost
Total shareholders equity attributable to Snap-on
Inc.
Noncontrolling interests
Total shareholders equity
Total liabilities and shareholders equity

431.8
165.1
795.8
188.3
83.1
$ 3,672.9

345.7
119.3
798.4
192.8
72.2
$ 3,729.4

$ 16.2
124.6
48.8
91.0
47.3
255.9
583.8
967.9
108.1
52.8
317.7
95.3
2,125.6

67.3
181.4
1,843.7
(174.6)
(386.9)

$ 216.0
146.1
45.0
86.7
40.4
346.9
881.1
954.8
94.4
59.6
246.1
89.0
2,325.0

67.3
169.2
1,644.1
(104.8)
(387.3)

1,530.9
16.4
1,547.3
$ 3,672.9

1,388.5
15.9
1,404.4
$ 3,729.4

3.
Required
4. a. Compute net operating profit after tax (NOPAT) for 2011
and 2010. Assume that combined federal and state statutory
tax rates are 37.7% for fiscal 2011 and 37.5% for fiscal 2010.
5. b. Compute net operating assets (NOA) for 2011 and 2010.
6. c. Compute return on net operating assets (RNOA) for 2011
and 2010. Comment on the year-over-year change. Net
operating assets are $1,673.0 million in 2009.
7. d. Disaggregate RNOA into profitability and asset turnover
components (NOPM and NOAT, respectively). Remember to
include both net sales and financial services revenue in total
revenue. What explains the year-over-year change in RNOA?