Compute and Interpret Measures for DuPont Disaggregation Analysis

Use the information below for 3M Company to answer the requirements (perform these computations from the perspective of a 3M shareholder).

($millions)

2015 2014 Sales

$31,718

Net income consolidated

5,787

Net income attributable to 3M shareholders

5,779

Assets

33,395 $31,886 Total equity

11,747 13,142 Equity attributable to 3M shareholders

11,708 13,109

a. Compute return on equity (ROE).

Round answer to two decimal places (ex: 0.12345 = 12.35%)

Answer

%

b. Compute the DuPont model component measures for profit margin, asset turnover, and financial leverage.

• Round profit margin 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

c. Compute ROA.

Round answer to two decimal places (ex: 0.12345 = 12.35%)

ROA Answer

%

d. 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%)