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)	2015	2014	2013
Net sales	$30,274	$31,821	$30,871
Operating expenses
Cost of sales	15,383	16,447	16,106
Selling, general and administrative expenses	6,182	6,469	6,384
Research, development and related expenses	1,763	1,770	1,715
Total operating expenses	23,328	24,686	24,205
Operating income	6,946	7,135	6,666
Interest expenses and income
Interest expense	149	142	145
Interest income	(26)	(33)	(41)
Total interest expense--net	123	109	104
Income before income taxes	6,823	7,026	6,562
Provision for income taxes	1,982	2,028	1,841
Net income including noncontrolling interest	$4,841	$4,998	$4,721
Less: Net income attributable to noncontrolling interest	8	42	62
Net income attributable to 3M	$ 4,833	$ 4,956	$ 4,659

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	118	1,439
Accounts receivable-net of allowances of $91 and $94	4,154	4,238
Inventories
Finished goods	1,655	1,723
Work in process	1,008	1,081
Raw materials and supplies	855	902
Total inventories	3,518	3,706
Other current assets	1,398	1,023
Total current assets	10,986	12,303
Marketable securities-noncurrent	9	15
Investments	117	102
Property, plant and equipment	23,098	22,841
Less: Accumulated depreciation	(14,583)	(14,352)
Property, plant and equipment-net	8,515	8,489
Goodwill	9,249	7,050
Intangible assets-net	2,601	1,435
Prepaid pension benefits	188	46
Other assets	1,053	1,769
Total assets	$32,718	$31,209
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
Accrued income taxes	332	435
Other current liabilities	2,404	2,884
Total current liabilities	7,118	5,964
Long-term debt	8,753	6,705
Pension and postretirement benefits	3,520	3,843
Other liabilities	1,580	1,555
Total liabilities	$20,971	$18,067
Equity
3M Company shareholders' equity
Common stock, par value $0.01 per share:
Shares outstanding-2015: 609,330,124;
Shares outstanding-2014: 635,134,594	$9	$9
Additional paid-in capital	4,791	4,379
Retained earnings	36,575	34,317
Treasury stock	(23,308)	(19,307)
Accumulated other comprehensive income (loss)	(6,359)	(6,289)
Total 3M Company shareholders' equity	11,708	13,109
Noncontrolling interest	39	33
Total equity	$11,747	$13,142
Total liabilities and equity	$32,718	$31,209

(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 =Answer($ millions) (b) Compute net operating assets (NOA) for 2015 and 2014. Treat noncurrent investments as a nonoperating item. 2015 NOA =Answer($ millions) 2014 NOA =Answer($ 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 =Answer% 2015 NOPM =Answer% 2015 NOAT =Answer (d) Compute net nonoperating obligations (NNO) for 2015 and 2014. 2015 NNO =Answer($ millions) 2014 NNO =Answer($ 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 =Answer% (f) What is the nonoperating return component of ROE for 2015? (Round your answers to two decimal places.) 2015 nonoperating return =Answer% (g) Which of the following statements reflects the best inference we can draw from the difference between 3M's ROE and RNOA?

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.