Disaggregation of ROCE - Kohls. Accounting, Research Paper

Disaggregation of ROCE – Kohl’ S
The return on capital employed (ROCE) increased by 5.78% from 10.42% to 16.20% in the FY2016 and FY2017.
On the Operating Side RNOA increased by 4.32% (12.56%-8.24%)
On the profitability side, NOPM increased by 1.69%, “Gross margin as a percentage of sales increased 15 basis points as effective inventory management contributed to fewer permanent and promotional markdowns. These increases were partially offset by higher shipping costs caused by online sales growth” (SEC, 2018). The Cost of merchandise sold as a percentage of the sales decreased slightly by -0.10%, and has been fairly stable in the past five years ranging from 63% to 64%. The increase in gross margin was the result of inventory management and less promotional and permanent markdowns, but there were slightly higher shipping costs. The net income increased by 54.5%, while the impairments, store closing and other costs were $186 million in 2016 and $ 0 in 2017. “Selling, general and administrative expenses ("SG&A") as a percentage of sales decreased 11 basis points as all areas effectively managed their expenses consistent with improving sales trends throughout the year” (SEC, 2018). The Depreciation and amortization increased 0.17%, while the net nonoperating Expense Percentage (NNEP) increased by 1.68%. The was a decrease in the corporate expenses and even as there was higher technology spending, this was offset by expense management in other areas (SEC, 2018).
On the productivity side, NOAT increased slightly by 0.15 from ...