Question
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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