Analysis and Interpretation of Profitability Balance sheets and income statements for 3M Company follow 3M COMPANY Consolidated Statements of Income 2015 2014 For Years ended December 31 (S millions) 2013 Net sales $30,274 $31,821 $30,871 Operating expenses Cost of sales 15,383 16,447 16,106 Selling, geneal and administrative expenses 6,182 6,469 6,384 1,763 1,770 1,715 Research, development and related expenses 23,328 24,686 24,205 Total operating expenses 6,946 7,135 6,666 Operating income Interest expenses and income 149 142 145 Interest expense (26) (33) (41) Interest income 109 104 123 Total interest expense-net Income before income taxes 6,823 7,026 6,562 1,982 2,028 1,841 Provision for income taxes Net income including noncontrolling interest $4,841 $4,998 $4,721 42 62 Less: Net income attributable to noncontrolling interest $4,833 4,956 $4,659 Net income attributable to 3M 3M COMPANY Consolidated Balance Sheets At December 31 ($ millions, except per share amount)2015 2014 Current Assets Cash and cash equivalents $1,798 $1,897 Marketable securities-current 18 1,439 Accounts receivable-net of allowances of $91 and $94 4,154 4,238 Finished goods 1,655 1,723 Work in process 1,008 1,081 Raw materials and supplies Total inventories 3,518 3,706 1,398 1,023 Other current assets Total current assets 0,986 12,303 102 Property, plant and equipment 23,098 22,841 (14,583) 14,352) Less: Accumulated depreciation 8,515 8,489 Property, plant and equipment-net 9,249 7,050 Intangible assets-net 2,601 1,435 Prepaid pension benefits 188 1,053 1.769 Other assets $32,718 $31,209 Total assets Liabilities Current liabilities Short-term borrowings and current portion of long.term debt $2,044 $106 Accounts payable 1,694 1,807 Accrued payroll 644 732 32 435 Accrued income taxes 2,404 2,884 Other current liabilities Total current liabilities 7,118 5,964 Long-term debt 8,753 6,705 Pension and postretirement benefits 3,520 3,843 1,580 1,555 Other liabilities $20,971 $18,067 Total liabilities 3M Company shareholders' equity Common stock, par value s0.01 per share: Shares outstanding-2015: 609,330,124; Shares outstanding-2014: 635,134,594 59 Additional paid-in capital ,791 4,379 Retained earnings 36,575 34,317 Treasury stock (23,308) (19,307) (6,359) (6,289) Accumulated other comprehensive income (loss) Total 3M Company shareholders' equity 11,708 13,109 Noncontrolling interest $11,747 $13,142 Total equity 32,718 $31,209 Total liabilities and equity (a) Compute net operating profit after tax (NOPAT) for 2015. Assume that the combined federal and statutory rate is: 37.0% (Round your answer to the nearest whole number.) 2015 NOPAT 0 X ($ millions) (b) Compute net operating assets (NOA) for 2015 and 2014. Treat noncurrent investments as a nonoperating item. 2015 NOA-0 x $ millions) 2014 NOA-0 x $ millions) (c) Compute 3M's RNOA, net operating profit margin (NOPM) and net operating asset turnover (NOAT) for 2015. (Round your answers to two decimal places. Do not round until your final answer. Do not use NOPM x NOAT to calculate RNOA.) 2015 RNOA 0 2015 NOPM0 % 2015 NOAT0 (d) Compute net nonoperating obligations (NNO) for 2015 and 2014 2015 NNO0 x $ millions) 2014 NNO0 x $ millions) (e) Compute return on equity (ROE) for 2015. (Round your answers to two decimal places. Do not round until your final answer.) 2015 ROE = 0 (f) What is the nonoperating return component of ROE for 2015? (Round your answers to two decimal places.) 2015 nonoperating return 0 (g) Which of the following statements reflects the best inference we can draw from the difference between 3M's ROE and RNOA? OROE> 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. OROE> RNOA implies that 3M has increased its financial leverage during the period