Analysis and Interpretation of Profitability 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 $21,494 $20,767 Operating expenses Cost of sales 10,943 10,532 Selling, general and administrative expenses 4,987 4,347 Research, development and related expenses 1,821 1,870 Gain on sale of businesses (547) (586) Total operating expenses 17,204 16,163 Operating income 4,290 4,604 Other expense, net* 136 94 Income before income taxes 4,154 4,510 Provision for income taxes 1,074 1,757 Net income including noncontrolling interest 3,080 2,753 Less: Net income attributable to noncontrolling interest 14 11 Net income attributable to 3M $3,066 $2,742 *Interest expense, gross $350 $322 3M COMPANY Consolidated Balance Sheets At December 31 ($ millions, except per share amount) 2018 2017 Current Assets Cash and cash equivalents $1,872 $2,003 Marketable securities 380 1,076 Accounts receivable 3,293 3,222 Total inventories 2,864 2,646 Prepaids 741 937 Other current assets 349 266 Total current assets 9,499 10,150 Property, plant and equipment-net 5,732 5,816 Goodwill 6,593 6,897 Intangible assets-net 1,743 1,926 Other assets 1,345 1,395 Total assets $24,912 $26,184 Current liabilities Short-term borrowings and current portion of long-term debt $794 $1,216 Accounts payable 1,486 1,276 Accrued payroll 749 870 Accrued income taxes 243 310 Other current liabilities 1,820 1,777 Total current liabilities 5,092 5,449 Long-term debt 8,798 7,935 Pension and postretirement benefits 1,959 2,375 Other liabilities 3,010 2,962 Total liabilities 18,859 18,721 3M Company shareholders' equity Common stock, par value 9 9 Additional paid-in capital 3,274 3,327 Retained earnings 26,657 25,659 Treasury stock (19,435) (16,982) Accumulated other comprehensive income (loss) (4,504) (4,609) Total 3M Company shareholders' equity 6,001 7,404 Noncontrolling interest 52 59 Total equity 6,053 7,463 Total liabilities and equity $24,912 $26,184 Combined federal and state statutory tax rate 22%

a. Compute net operating profit after tax (NOPAT) for 2018. Assume that the combined federal and state statutory tax rate is 22%. NOPAT Answer 0

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

c. Compute and disaggregate 3Ms RNOA into net operating profit margin (NOPM) and net operating asset turnover (NOAT) for 2018. Demonstrate that RNOA = NOPM NOAT. Numerator Denominator RNOA Answer Answer Answer 0 Answer 0 Numerator Denominator NOPM Answer Answer Answer 0 Answer 0 Numerator Denominator NOAT Answer Answer Answer 0 Answer 0 Ratio Number NOPM Answer 0 NOAT Answer 0 RNOA 0 ***RNOA may be different from first RNOA calculation due to rounding

d. Compute net nonoperating obligations (NNO) for 2018 and 2017. Confirm the relation: NOA = NNO + Total equity Year NNO 2018 Answer 0 2017 Answer 0 Year NNO Total equity NOA 2018 Answer 0 Answer 0 0 2017 Answer 0 Answer 0 0

e. Compute return on equity (ROE) for 2018. Numerator Denominator ROE Answer Answer Answer 0 Answer 0

f. What is the nonoperating return component of ROE for 2018? ROE RNOA Nonoperating component of ROE Answer 0 Answer 0 0