Refer to the 2012 fiscal year financial data of 3M Company from Problem 4-36 to answer the following requirements (perform these computations from the perspective of a \(3 \mathrm{M}\) shareholder).

a. Compute the DuPont model component measures for profit margin, asset turnover, and financial leverage. Then, compute ROA.

b. Compute ROE. Confirm that ROE equals ROE computed using the component measures from part \(a(\mathrm{ROE}=\mathrm{PM} \times \mathrm{AT} \times \mathrm{FL})\).

c. Compute adjusted ROA (assume a tax rate of \(37 \%\) and pretax net interest expense of \$132).

Problem 4-36

Balance sheets and income statements for 3M Company follow.

Required

a. Compute net operating profit after tax (NOPAT) for 2012. Assume that the combined federal and state statutory tax rate is \(37 \%\).

b. Compute net operating assets (NOA) for 2012 and 2011. Treat noncurrent investments as a nonoperating item.

c. Compute and disaggregate 3M's RNOA into net operating profit margin (NOPM) and net operating asset turnover (NOAT) for 2012. Demonstrate that RNOA \(=\) NOPM \(\times\) NOAT.

d. Compute net nonoperating obligations (NNO) for 2012 and 2011. Confirm the relation: \(\mathrm{NOA}=\) NNO + Stockholders' equity.

e. Compute return on equity (ROE) for 2012.
\(f\). What is the nonoperating return component of ROE for 2012 ?
g. Comment on the difference between ROE and RNOA. What inference can we draw from this comparison?

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For Years Ended Dec. 31 ($ millions) Net sales..... Operating expenses Cost of sales.... Consolidated Statements of Income 2012 $29,904 Selling, general and administrative expenses Research, development and related expenses Total operating expenses. Operating income... Interest expense and income Interest expense. Interest income.. Total interest expense-net... Income before income taxes. Provision for income taxes... Net income including noncontrolling interest.. Less: Net income attributable to noncontrolling interest ... Net income attributable to 3M ..... 15,685 6,102 1,634 23,421 6,483 171 (39) 132 6,351 1,840 $ 4,511 67 $ 4,444 2011 $29,611 186 15,693 $4,283 6,170 1,570 23,433 6,178 2010 (39) 147 6,031 1,674 $4,357 4,163 $26,662 201 74 $4,085 13,831 5,479 1,434 20,744 5,918 (38) 163 5,755 1,592 78