Both companies have net operating profit margins (NOPM) of 6.1% which means that for every dollar of sales, each company reports 6.1₵ of operating profit after tax. However, TJX has a much higher operating asset turnover-6.28 compared to Nordstrom’s 2.18. This means that the net operating assets of TJX generate nearly three times the volume of sales compared to Nordstrom. Combining NOPM and NOAT for each company, we calculate return on net operating Assets (RNOA) of 13.3% for Nordstrom and 38.3% for TJX.
The nonoperating returns for the two companies differ significantly with Nordstrom’s nonoperating return of 18.4% nearly double that of TJX (10.1%) Due to differences in the degree of financial leverage between the two companies.
