Direct Computation of Nonoperating Return Balance sheets and income statements for 3M Company follow.

3M COMPANY
Consolidated Statements of Income
For Years Ended December 31 ($ millions)	2018	2017
Net sales	$32,765	$31,657
Operating expenses
Cost of sales	16,682	16,055
Selling, general and administrative expenses	7,602	6,626
Research, development and related expenses	1,821	1,870
Gain on sale of businesses	(547)	(586)
Total operating expenses	25,558	23,965
Operating income	7,207	7,692
Other expense, net*	207	144
Income before income taxes	7,000	7,548
Provision for income taxes	1,637	2,679
Net income including noncontrolling interest	5,363	4,869
Less: Net income attributable to noncontrolling interest	14	11
Net income attributable to 3M	$5,349	$4,858

* Interest expense, gross is $350 million in 2018 and $322 million in 2017.

3M COMPANY
Consolidated Balance Sheets
At December 31 ($ millions)	2018	2017
Current assets
Cash and cash equivalents	$2,853	$3,053
Marketable securities	380	1,076
Accounts receivable	5,020	4,911
Total inventories	4,366	4,034
Prepaids	741	937
Other current assets	349	266
Total current assets	13,709	14,277
Property, plant and equipment, net	8,738	8,866
Goodwill	10,051	10,513
Intangible assetsnet	2,657	2,936
Other assets	1,345	1,395
Total assets	$36,500	$37,987
Current liabilities
Short-term borrowings and current portion of long-term debt	$1,211	$1,853
Accounts payable	2,266	1,945
Accrued payroll	749	870
Accrued income taxes	243	310
Other current liabilities	2,775	2,709
Total current liabilities	7,244	7,687
Long-term debt	13,411	12,096
Pension and postretirement benefits	2,987	3,620
Other liabilities	3,010	2,962
Total liabilities	$26,652	$26,365
3M Company shareholders equity
Common stock par value	9	9
Additional paid-in capital	5,643	5,352
Retained earnings	40,636	39,115
Treasury stock	(29,626)	(25,887)
Accumulated other comprehensive income (loss)	(6,866)	(7,026)
Total 3M Company shareholders equity	9,796	11,563
Noncontrolling interest	52	59
Total equity	9,848	11,622
Total liabilities and equity	$36,500	$37,987

In 2018, 3Ms return on equity (ROE) is 50.09% and its return on net operating assets (RNOA) is 25.89%. Required a. Compute net nonoperating expense (NNE) and net operating profit after tax (NOPAT). Assume a tax rate of 22%. Note: Round answers to the nearest million. 2018 NNE: $Answer

million 2018 NOPAT: $Answer

million b. Compute net nonoperating obligations (NNO). 2018 NNO: $Answer

million 2017 NNO: $Answer

million

c. Compute financial leverage (FLEV). Note: Round your answer to three decimal places (for example, enter 6.776 for 6.77555). Answer

d. Compute NNEP and Spread. Note: Round percentages to two decimal places (for example, enter 6.66% for 6.6555%). NNEP: Answer

% Spread: Answer

% e. Compute the noncontrolling interest ratio (NCI ratio). Note: Round your answers to four decimal places (for example, enter 6.7756 for 6.775555). NCI ratio: Answer

f. Confirm the relation: ROE = [RNOA + (FLEV Spread)] NCI ratio. Note: For FLEV, round amount to three decimal places (for example, enter 6.776 for 6.775555). Note: For RNOA and Spread round percentages to two decimal places (for example, enter 6.66% for 6.6555%). Note: Round NCI ratio, round amount to four decimal places (for example, enter 1.7756 for 1.77555). Note: Round ROE to the nearest whole percentage.

RNOA	+ (	FLEV	x	Spread	x	NCI Ratio	=	ROE
Answer	+ (	Answer	x	Answer	x	Answer	) =	Answer