A manager’s primary goal is to maximize the value of his or her firm’s stock. The stock’s value is calculated as the present value of the firm’s future cash flow stream. A study of a firm’s financial statements provides clues to its past, present, and likely future performance. Managers must understand financial statements because their actions have a direct impact on them. Managers and investors alike need to know how to read and interpret financial statements.

Let us examine Minnesota Mining and Manufacturing (otherwise known as 3M) Company’s financial statements as reported in its latest Annual Report. Go to http://phx.corporate-ir.net/phoenix.zhtml?c=80574&p=irol-irhome. Then on the left-hand panel expand “Financial Information”, then click on “Annual Reports and Proxy”, then click on “Annual Report” for the latest year.

a. How much cash and cash equivalents did the company hold as of December 31 of the year earlier and as of December 31 for the latest year? Did 3M have more or less cash as of December 31 of the latest year than it did as of December 31 of the year earlier?

b. What is 3M’s common shareholders’ equity as of year-end the year earlier and as of year-end for the latest year? Did total common equity increase from the year earlier to the latest year?

c. What was 3M’s operating income in the latest year and in the year earlier? Did operating income increase in the latest year when compared against the year earlier?

d. What was 3M’s net income available to common stockholders for in the year earlier and the latest year?