Balance sheets and income statements for 3M Company follow. Consolidated Statements of Income Years ended December 31 ($ millions) 2009 2008 2007 Net sales $23,123 $25,269 $24.462 Operating expenses Cost of sales 12.109 13.379 12,735 Selling. general and administrative expenses 4,907 5,245 5.015 Research, development and related expenses 1,293 1,404 1,368 Loss/(gain) from sale of business 23 (849) Total operating expenses 18.309 20,051 18.269 Operating income 4.814 5.218 6.193 Interest expenses and income Interest expense 219 215 210 Interest income (37) (105) (132) Total interest expense 182 11078 Income before income taxes 4,632 5.108 6.115 Provision for income taxes 1.388 1.588 1.964 Net income including noncontrolling interest 3.244 3.520 Less: Net income attributable to noncontrolling interest 60 Net income $ 3.193 $3,460 54,096 55 2009 2008 $3,040 51.849 744 373 3,250 3,195 1,255 815 569 Consolidated Balance Sheets ($ millions) Assets Current Assets Cash and cash equivalents Marketable securities-current Accounts receivable-net Inventories Finished goods Work in process Raw materials and supplies Total inventories Other current assets Total current assets Marketable securities-noncurrent Investments Property, plant and equipment Less: Accumulated depreciation Property, plant and equipment.net Goodwill Intangible assets-net Prepaid pension benefits Other assets Total assets Liabilities Current liabilities 1,505 851 657 3,013 1.168 9.598 2.639 1,122 10.795 825 352 103 19,440 18.812 (12.440) (11.926) 7.000 6.886 5.832 5.753 1.342 1.398 36 275 1,659 S. 27. 250 S 25.793 78 644 350 PIPIGIL Other assets 1,275 1,659 Total assets $ 27,250 $25,793 Liabilities Current liabilities Short-term borrowings and current portion of long-term debt $ 613 $1,552 Accounts payable 1,453 1.301 Accrued payroll 680 Accrued income taxes 252 Other current liabilities 1.899 1,992 Total current liabilities 4.897 5.839 Long-term debt 5,097 5.166 Pension and postretirement benefits 2.227 2.847 Other liabilities 1.727 1,637 Total liabilities 13.948 15,489 Equity 3M Company shareholders equity: Common stock, par value 5.01 per share: Additional paid-in capital 3.153 3.006 Retained earnings 23.753 22,227 Treasury stock (10 397) (11.676) Accumulated other comprehensive income (loss) (3.754) (3.686) Total 3M Company shareholders equity 12.764 9.880 Noncontrolling interest 538 Total equity 13.302 10,304 Total liabilities and equity $ 271 250 525.793 (a) Compute net operating profit after tax (NOPAT) for 2009. Assume that the combined federal and statutory rate is: 36.1% (Round your answer to the nearest whole number.) 2009 NOPAT (5 millions) (b) Compute net nonoperating assets (NOA) for 2009 and 2008. Treat noncurrent Investments as a nonoperating item. 2009 NOA- (5 millions) 2008 NOA - (5 millions) (c) Compute 3M's RNOA, net operating profit margin (NOPM) and net operating asset turnover (NOAT) for 2009. (Round your answers to two decimal places. Do not use NOPM * NOAT to calculate RNOA.) 2009 RNOA- 2009 NOPM- 2009 NOAT- Assignment Module B Jump to.. Assignment Module (d) Compute net nonoperating obligations (NNO) for 2009 and 2008. 2009 NNO = (5 millions) 2008 NNO ($ millions) (e) Compute return on equity (ROE) for 2009. (Round your answers to two decimal places. Do not round until your final answer.) 2009 ROE (1) What is the nonoperating return component of ROE for 2009? (Round your answers to two decimal places.) Hint: Use your prior rounded answers to compute this answer. 2009 nonoperating return = (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. ROERNOA implies that 3M's equity has grown faster than its NOA ROE > RNOA implies that 3M has increased its financial leverage during the period