Answer Happy

Phillip Morris reported the following information in its 2018Form 10-K. $ millions Dec. 31, 2018 Dec. 31, 2017 Stockholders'(Deficit) Equity Common stock, no par value (2,109,316,331 sharesissued in 2018 and 2017) $0 $0 Additional paid-in capital 1,9391,972 Earnings reinvested in the business 31,014 29,859 Accumulatedother comprehensive losses (10,111) (8,535) Total stockholders'equity before treasury stock 22,842 23,296 Less: cost ofrepurchased stock (554,736,610 and 556,098,569 shares in 2018 and2017, respectively) 35,301 35,382 Total PMI stockholders' deficit(12,459) (12,086) Noncontrolling interests 1,720 1,856 Totalstockholders' deficit $(10,739) $(10,230) Net earnings $8,286 Netearnings attributable to noncontrolling interests 375 Net earningsattributable to PMI $7,911
a. Compute ROE for 2018 using the equity numbers as reported.Note: Round the percentage to one decimal place (for example, enter14.6% for 14.55555%).
Answer (51.7) % (wrong)
How do you interpret this ratio? Answer Ratio is notinterpretable (correct)
b. Add back treasury shares to adjust for the company’s negativeequity. Recompute ROE for 2018. Note: Round the percentage to onedecimal place (for example, enter 14.6% for 14.55555%).
Answer 39.5 % (wrong)
Does the adjusted ratio better captures the company’sperformance during 2018? Answer Yes (correct)
Please see if you can correct the wrong answers above. Thanks