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Balance sheets and income statements for 3 M Company follow. 3 M COMPANY Consolidated Statements of Income For Years ended December 3 1 ( $
Balance sheets and income statements for M Company follow. M COMPANY Consolidated Statements of Income For Years ended December $ millions Net sales $ $ Operating expenses Cost of sales Selling, general and administrative expenses Research, development and related expenses Gain on sale of businesses Total operating expenses Operating income Other expense, net Income before income taxes Provision for income taxes Net income including noncontrolling interest Less: Net income attributable to noncontrolling interest Net income attributable to M $ $ Interest expense, gross $ $ M COMPANY Consolidated Balance Sheets At December $ millions, except per share amount Current Assets Cash and cash equivalents $ $ Marketable securities Accounts receivable Total inventories Prepaids Other current assets Total current assets Property, plant and equipmentnet Goodwill Intangible assetsnet Other assets Total assets $ $ Current liabilities Shortterm borrowings and current portion of longterm debt $ $ Accounts payable Accrued payroll Accrued income taxes Other current liabilities Total current liabilities Longterm debt Pension and postretirement benefits Other liabilities Total liabilities M Company shareholders' equity Common stock, par value Additional paidin capital Retained earnings Treasury stock Accumulated other comprehensive income loss Total M Company shareholders' equity Noncontrolling interest Total equity Total liabilities and equity $ $ Combined federal and state statutory tax rate a Compute net operating profit after tax NOPAT for Assume that the combined federal and state statutory tax rate is NOPAT b Compute net operating assets NOA for and Year NOA c Compute and disaggregate Ms RNOA into net operating profit margin NOPM and net operating asset turnover NOAT for Demonstrate that RNOA NOPM times NOAT. Numerator Denominator RNOA Numerator Denominator NOPM Numerator Denominator NOAT Ratio Number NOPM NOAT RNOA RNOA may be different from first RNOA calculation due to rounding d Compute net nonoperating obligations NNO for and Confirm the relation: NOA NNO Total equity Year NNO Year NNO Total equity NOA e Compute return on equity ROE for Numerator Denominator ROE f What is the nonoperating return component of ROE for ROE RNOA Nonoperating component of ROE
Balance sheets and income statements for M Company follow.
M COMPANY
Consolidated Statements of Income
For Years ended December $ millions
Net sales $ $
Operating expenses
Cost of sales
Selling, general and administrative expenses
Research, development and related expenses
Gain on sale of businesses
Total operating expenses
Operating income
Other expense, net
Income before income taxes
Provision for income taxes
Net income including noncontrolling interest
Less: Net income attributable to noncontrolling interest
Net income attributable to M $ $
Interest expense, gross $ $
M COMPANY
Consolidated Balance Sheets
At December $ millions, except per share amount
Current Assets
Cash and cash equivalents $ $
Marketable securities
Accounts receivable
Total inventories
Prepaids
Other current assets
Total current assets
Property, plant and equipmentnet
Goodwill
Intangible assetsnet
Other assets
Total assets $ $
Current liabilities
Shortterm borrowings and current portion of longterm debt $ $
Accounts payable
Accrued payroll
Accrued income taxes
Other current liabilities
Total current liabilities
Longterm debt
Pension and postretirement benefits
Other liabilities
Total liabilities
M Company shareholders' equity
Common stock, par value
Additional paidin capital
Retained earnings
Treasury stock
Accumulated other comprehensive income loss
Total M Company shareholders' equity
Noncontrolling interest
Total equity
Total liabilities and equity $ $
Combined federal and state statutory tax rate
a Compute net operating profit after tax NOPAT for Assume that the combined federal and state statutory tax rate is
NOPAT
b Compute net operating assets NOA for and
Year NOA
c Compute and disaggregate Ms RNOA into net operating profit margin NOPM and net operating asset turnover NOAT for Demonstrate that RNOA NOPM times NOAT.
Numerator Denominator RNOA
Numerator Denominator NOPM
Numerator Denominator NOAT
Ratio Number
NOPM
NOAT
RNOA
RNOA may be different from first RNOA calculation due to rounding
d Compute net nonoperating obligations NNO for and Confirm the relation: NOA NNO Total equity
Year NNO
Year NNO Total equity NOA
e Compute return on equity ROE for
Numerator Denominator ROE
f What is the nonoperating return component of ROE for
ROE RNOA Nonoperating component of ROE
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