A managers primary goal is to maximize the value of his or her firms stock. The stocks value is calculated as the present value of the firms future cash flow stream. A study of a firms 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) Companys financial statements as reported in its latest Annual Report. Go to 3m.com. Then click on LEARN MORE ABOUT 3M. Then click on Investor Relations. Then click on FINANCIALS to expand, and then select Annual Reports and Proxy Statements. Then click on the 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 3Ms 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?