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Compute and Interpret Measures for DuPont Disaggregation Analysis Balance sheets and income statements for 3M Company follow. 3M Company Consolidated Statements of Income For Years

Compute and Interpret Measures for DuPont Disaggregation Analysis Balance sheets and income statements for 3M Company follow.

3M Company
Consolidated Statements of Income
For Years Ended Dec. 31 ($millions) 2015 2014 2013
Net sales $30,674 $31,821 $30,871
Operating expenses
Cost of sales 15,383 16,447 16,106
Selling, general & administrative expenses 6,182 6,469 6,384
Research, development & related expenses 1,763 1,770 1,715
Total operating expenses 23,328 24,686 24,205
Operating income 7,346 7,135 6,666
Interest expense and income
Interest expense 149 142 145
Interest income (26) (33) (41)
Total interest expense -net 123 109 104
Income before income taxes 7,223 7,026 6,562
Provision for income taxes 2,167 2,028 1,841
Net income inc. noncontrolling interest 5,056 4,998 4,721
Less: Net income attributable to NCI 8 42 62
Net income attributable to 3M $5,048 $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 $1,898 $1,997
Marketable securities--current 198 1,519
Accounts receivable, net 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 11,166 12,483
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 $32,898 $31,389
Liabilities
Current liabilities
Short-term debt & current portion of LT debt $2,144 $186
Accounts payable 1,774 1,907
Accrued payroll 644 732
Accrued income taxes 332 435
Other current liabilities 2,404 2,884
Total current liabilities 7,298 6,144
Long-term debt 8,753 6,705
Pension and postretirement benefits 3,520 3,843
Other liabilities 1,580 1,555
Total liabilities 21,151 18,247
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 $32,898 $31,389

a. Compute the DuPont model component measures for profit margin, asset turnover, and financial leverage. Then, compute ROA.

Round profit margin and ROA to two decimal places (ex: 0.12345 = 12.35%) Round asset turnover and financial leverage to three decimal places.

Profit margin Answer

% Asset turnover Answer

Financial leverage Answer

ROA Answer

% b. Compute ROE. Confirm that ROE equals ROE computed using the component measures from part a (ROE = PM x AT x FL). Round answer to two decimal places (ex: 0.12345 = 12.35%) Answer

% c. Compute adjusted ROA (assume a statutory tax rate of 37% and pretax net interest expense of $123). Round answer to two decimal places (ex: 0.12345 = 12.35%) Answer

%

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