Balance sheets and income statements for 3M Company follow.

3M COMPANY
Consolidated Statements of Income
For Years ended December 31 ($ millions)	2018	2017
Net sales	$32,765	$31,657
Operating expenses
Cost of sales	16,682	16,055
Selling, general and administrative expenses	7,602	6,626
Research, development and related expenses	1,821	1,870
Gain on sale of businesses	(547)	(586)
Total operating expenses	25,558	23,965
Operating income	7,207	7,692
Other expense, net*	207	144
Income before income taxes	7,000	7,548
Provision for income taxes	1,637	2,679
Net income including noncontrolling interest	5,363	4,869
Less: Net income attributable to noncontrolling interest	14	11
Net income attributable to 3M	$ 5,349	$ 4,858

*Interest expense, gross $350 million in 2018 and $322 million in 2017.

3M COMPANY
Consolidated Balance Sheets
At December 31 ($ millions, except per share amount)	2018	2017
Current Assets
Cash and cash equivalents	$ 2,853	$ 3,053
Marketable securities	380	1,076
Accounts receivable	5,020	4,911
Total inventories	4,366	4,034
Prepaids	741	937
Other current assets	349	266
Total current assets	13,709	14,277
Property, plant and equipment-net	8,738	8,866
Goodwill	10,051	10,513
Intangible assets-net	2,657	2,936
Other assets	1,345	1,395
Total assets	$36,500	$37,987
Current liabilities
Short-term borrowings and current portion of long-term debt	$ 1,211	$ 1,853
Accounts payable	2,266	1,945
Accrued payroll	749	870
Accrued income taxes	243	310
Other current liabilities	2,775	2,709
Total current liabilities	7,244	7,687
Long-term debt	13,411	12,096
Pension and postretirement benefits	2,987	3,620
Other liabilities	3,010	2,962
Total liabilities	26,652	26,365
3M Company shareholders' equity
Common stock, par value	$9	$9
Additional paid-in capital	5,643	5,352
Retained earnings	40,636	39,115
Treasury stock	(29,626)	(25,887)
Accumulated other comprehensive income (loss)	(6,866)	(7,026)
Total 3M Company shareholders' equity	9,796	11,563
Noncontrolling interest	52	59
Total equity	9,848	11,622
Total liabilities and equity	$36,500	$37,987

(a) Compute net operating profit after tax (NOPAT) for 2018. Assume that the combined federal and state statutory tax rate is 22%. (Round your answer to the nearest whole number.)
2018 NOPAT =Answer

($ millions)

(b) Compute net operating assets (NOA) for 2018 and 2017.
2018 NOA =Answer

($ millions)
2017 NOA =Answer

($ millions)

(c) Compute and disaggregate 3M’s RNOA into net operating profit margin (NOPM) and net operating asset turnover (NOAT) for 2018. Demonstrate that RNOA = NOPM × NOAT. (Round your answers to two decimal places. Do not round until your final answer. Do not use NOPM x NOAT to calculate RNOA.)
2018 RNOA =Answer

%
2018 NOPM =Answer

%
2018 NOAT =Answer

(d) Compute net nonoperating obligations (NNO) for 2018 and 2017. Confirm the relation: NOA = NNO + Total equity
2018 NNO =Answer

($ millions)
2017 NNO =Answer

($ millions)

(e) Compute return on equity (ROE) for 2018. (Round your answers to two decimal places. Do not round until your final answer.)
2018 ROE =Answer

%

(f) What is the nonoperating return component of ROE for 2018?(Round your answers to two decimal places.)
2018 nonoperating return =Answer

%

(g) Comment on the difference between ROE and RNOA. What inference can we draw from this comparison?

ROE > RNOA implies that 3M has taken on too much financial leverage.

ROE > RNOA implies that 3M is able to borrow money to fund operating assets that yield a return greater than its cost of debt.

ROE > RNOA implies that 3M's equity has grown faster than its NOA.

ROE > RNOA implies that 3M has increased its financial leverage during the period.