Analysis and Interpretation of Profitability Consolidated Balance Sheets

$\backslash$table$[[$At December $31($$ millions, except per sh$,2018,2017],[$Current Assets$],[$Cash and cash equivalents,,$$1,691],[$Marketable securities$,380,1,076],[$Accounts receivable,$2,781,2,721],[$Total inventories,$2,419,2,235,],[$Prepaids$,741,937],[$Other current assets,$349,266],[$Total current assets,$8,251,,8,926,],[$Property$,$ plant and equipment$-$net,$4,841,,4,912],[$Goodwill$,5,568,,5,824,],[$Intangible assets$-$net,$1,472,1,627,],[$Other assets,$1,345,,1,395],[$Total assets,$\{$f$3$f$87$e$0$e$8-$b$4$f$8-4$d$30-8755-8$b$543730$d$564\}$

$\backslash$table$[[,]],$$$22,684,],[$Current liabilities$],[$Short$-$term borrowings and current portion of long$-$term debt,$$671,\backslash$table$[[$$$1,027,]]],[$Accounts payable,$1,255,,1,078,],[$Accrued payroll,$749,870],[$Accrued income taxes,$243,310],[$Other current liabilities,$1,537,1,501],[$Total current liabilities,$4,455,,4,786],[$Long$-$term debt,$7,430,,6,701],[$Pension and postretirement benefits,$1,655,,2,005],[$Other liabilities,$3,010,,2,962,],[$Total liabilities,$16,550,16,454],[3$M Company shareholders' equity$],[$Common stock, par value,$9,9],[$Additional paid$-$in capital,$2,571,2,725],[$Retained earnings,$22,512,21,670],[$Treasury stock,$(16,413),,(14,341),],[$Accumulated other comprehensive income $($loss$),(3,804),,(3,892),],[$Total $3$M Company shareholders' equity,$4,875,,6,171],[$Noncontrolling interest,$52,59],[$Total equity,$4,927,,6,230,],[$Total liabilities and equity,$\{$f$8$ce$8$aab$3-$fc$4$f$-41$bf$-$a$51$e$-$a$7$efc$586$c$537\}$

$\backslash$table$[[$$$1,]],$$$22,684,],[$Combined federal and state,$22\%,]]$ a$.$ Compute net operating profit after tax $($NOPAT$)$ for $2018.$ Assume that the combined federal and state statutory tax rate is $22\%.$

NOPAT

$

$0$

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

c$.$ Compute and disaggregate $3$M$\text{'}$s RNOA into net operating profit margin $($NOPM$)$ and net operating asset turnover $($NOAT$)$ for $2018.$ Demonstrate that RNOA $=$ NOPM $$ NOAT.

$***$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 e$.$ Compute return on equity $($ROE$)$ for $2018.$

f$.$ What is the nonoperating return component of ROE for $2018?$

Please answer all parts of the question.

Balance sheets and income statements for $3$M Company follow.

$\backslash$table$[[\backslash$table$[[3$M COMPANY$],[$Consolidated Statements of Income$]]],[$For Years ended December $31($ $ millions$),2018,2017],[$Net sales,$$18,152,$$$17,538],[$Operating expenses$],[$Cost of sales,$9,242,8,894,2,],[$Selling$,$ general and administrative expenses,$4,212,3,671,],[$Research$,$ development and related expenses,$1,821,1,870,],[$Gain on sale of businesses,$(547),(586],[$Total operating expenses,$14,728,13,849,],[$Operating income,$3,424,,3,689,],[$Other expense, net$*,115,80,],[$Income before income taxes,$3,309,3,609,],[$Provision for income taxes,$907,1,484],[$Net income including noncontrolling interest,$2,402,2,125,],[$Less: Net income attributable to noncontrolling interest,$14,11],[$Net income attributable to $3$M$,$$$2,388,$$$2,114],[*$Interest expense, gross,$$350,$$$322]]$