As a first step, we need to estimate what percentage of MMMs capital comes from debt, preferred stock, and common equity. This information can be found on the firms latest annual balance sheet. (As of year end 2013, MMM had no preferred stock.) Total debt includes all interest-bearing debt and is the sum of short-term debt and long-term debt.

a. Recall that the weights used in the WACC are based on the companys target capital structure. If we assume that the company wants to maintain the same mix of capital that it currently has on its balance sheet, what weights should you use to estimate the WACC for MMM?

b. Find MMMs market capitalization, which is the market value of its common equity. Using the sum of its short- term debt and long-term debt from the balance sheet (we assume that the market value of its debt equals its book value) and its market capitalization, recalculate the firms debt and common equity weights to be used in the WACC equation. These weights are approximations of market-value weights. Be sure not to include accruals in the debt calculation

MMM Company Financials Exchange:NYSE Industry: Health Community Rati View: MMMA MMM $204.56* 0.22 0.11% Delayed - data as of Nov. 29, 2018 - Find a broker to begin trading MMM now ist Save Stocks WS Income Statement Balance Sheet Cash Flow Financial Ratios Get Quarterly Data Annual Income Statement (values in 000's) Period Ending Current Assets Cash and Cash Equivalents Short-Term Investments Trend12/31/2017 12/31/2016 12/31/2015 12/31/2014 te $3,053,000 $2,398,000 $1,798,000 $1,897,000 $076,000 $280,000 $4,911,000 $4,392,000 $4,154,000 $4,238,000 $4,034,000 $3,385,000 $3,518,000 $3,706,000 $1,203,000$1,271,000 $1,398,000 $1,023,000 $14,277,000 $11,726,000 $10,986,000 $1,303,000 te $118,000 $1,439,000 Net Receivables Inventory Other Current Assets Total Current Assets Long-Term Assets I $0 $0 $126,000 $117,000 Long-Term Investments Fixed Assets $8,866,000 $8,516,000 $8,515,000 $8,489,000 $10,513,000 $9,166,000 $9,249,000 $,050,000 $2,936,000$2,320,000 $2,601,000 $1,435,000 Goodwill Intangible Assets Accounts Payable $3,125,000 $2,775,000 $2,670,000 $2,974,000 Short-Term Debt / Current Portion$1,853,000 972,000 $%2,044,000 $106,000 of Long-Term Debt Other Current Liabilities $2,709,000 $2,472,000 $2,404,000 $2,884,000 $7,687,000$6,219,000 $7,118,000 $5,964,000 $12,096,000$10,678,000 $8,753,000 $6,705,000 $6,582,000 $5,666,000 $5,544,000 $5,398,000 Total Current Liabilities Long-Term Debt Other Liabilities Deferred Liability Charges $0 $0 $0 $45,000 $0 $0 $39,000 $0 $0 $33,000 Misc. Stocks $0 Minority Interest $59,000 Total Liabilities $26,424,000 $22,608,000 $21,454,000 $18,100,000 Stock Holders Equity $9,000 $5,352,000 $5,061,000 $4,791,000 $4,379,000 $39,115,000 $37,907,000 $36,296,000 $34,317,000 ($25,887,000) ($25,434,000) ($23,308,000) ($19,307,000) Common Stocks $9,000 $9,000 $9,000 Capital Surplus Retained Earnings Treasury Stock Other Equity Total Equity Total Liabilities & Equity II($7,026,000) ($7,245,000) ($6,359,000) ($6,289,000) $11,563,000 $10,298,000 $11,429,000 $13,109,000 $37,987,000 $32,906,000 $32,883,000 $31,209,000