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Analysis and Interpretation of Profitability Balance sheets and income statements for 3M Company follow. Consolidated Statements of Income Years ended December 31 ($ millions) 2009

Analysis and Interpretation of Profitability Balance sheets and income statements for 3M Company follow.

Consolidated Statements of Income

Years ended December 31 ($ millions)

2009

2008

2007

Net sales

$23,123

$25,269

$24,462

Operating expenses

Cost of sales

12,109

13,379

12,735

Selling, general and administrative expenses

4,907

5,245

5,015

Research, development and related expenses

1,293

1,404

1,368

Loss/(gain) from sale of business

--

23

(849)

Total operating expenses

18,309

20,051

18,269

Operating income

4,814

5,218

6,193

Interest expenses and income

Interest expense

219

215

210

Interest income

(37)

(105)

(132)

Total interest expense

182

110

78

Income before income taxes

4,632

5,108

6,115

Provision for income taxes

1,388

1,588

1,964

Net income including noncontrolling interest

3,244

3,520

4,151

Less: Net income attributable to noncontrolling interest

51

60

55

Net income

$ 3,193

$ 3,460

$ 4,096

Consolidated Balance Sheets

($ millions)

2009

2008

Assets

Current Assets

Cash and cash equivalents

$ 3,040

$ 1,849

Marketable securities-current

744

373

Accounts receivable-net

3,250

3,195

Inventories

Finished goods

1,255

1,505

Work in process

815

851

Raw materials and supplies

569

657

Total inventories

2,639

3,013

Other current assets

1,122

1,168

Total current assets

10,795

9,598

Marketable securities-noncurrent

825

352

Investments

103

111

Property, plant and equipment

19,440

18,812

Less: Accumulated depreciation

(12,440)

(11,926)

Property, plant and equipment-net

7,000

6,886

Goodwill

5,832

5,753

Intangible assets-net

1,342

1,398

Prepaid pension benefits

78

36

Other assets

1,275

1,659

Total assets

$ 27,250

$ 25,793

Liabilities

Current liabilities

Short-term borrowings and current portion of long-term debt

$ 613

$ 1,552

Accounts payable

1,453

1,301

Accrued payroll

680

644

Accrued income taxes

252

350

Other current liabilities

1,899

1,992

Total current liabilities

4,897

5,839

Long-term debt

5,097

5,166

Pension and postretirement benefits

2,227

2,847

Other liabilities

1,727

1,637

Total liabilities

13,948

15,489

Equity

3M Company shareholders' equity: Common stock, par value $.01 per share;

9

9

Additional paid-in capital

3,153

3,006

Retained earnings

23,753

22,227

Treasury stock

(10,397)

(11,676)

Accumulated other comprehensive income (loss)

(3,754)

(3,686)

Total 3M Company shareholders' equity

12,764

9,880

Noncontrolling interest

538

424

Total equity

13,302

10,304

Total liabilities and equity

$ 27,250

$ 25,793

(a) Compute net operating profit after tax (NOPAT) for 2009. Assume that the combined federal and stat rate is: 36.1% (Round your answer to the nearest whole number.) 2009 NOPAT =Answer ($ millions)

(b) Compute net operating assets (NOA) for 2009 and 2008. Treat noncurrent Investments as a nonoperating item. 2009 NOA =Answer($ millions) 2008 NOA =Answer($ millions) (c) Compute 3M's RNOA, net operating profit margin (NOPM) and net operating asset turnover (NOAT) for 2009. (Round your answers to two decimal places. Do not use NOPM x NOAT to calculate RNOA.) 2009 RNOA =Answer% 2009 NOPM =Answer% 2009 NOAT =Answer

(d) Compute net nonoperating obligations (NNO) for 2009 and 2008. 2009 NNO =Answer($ millions) 2008 NNO =Answer($ millions) (e) Compute return on equity (ROE) for 2009. (Round your answers to two decimal places. Do not round until your final answer.) Hint: Remember ROE is calculated attributable to controlling interest. 2009 ROE =Answer% (f) What is the nonoperating return component of ROE for 2009? (Round your answers to two decimal places.) 2009 nonoperating return =Answer%

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