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Help me find the correct value of NNEP, Spread, and NCI ratio. Direct Computation of Nonoperating Return Balance sheets and income statements for 3M Company
Help me find the correct value of NNEP, Spread, and NCI ratio.
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 $32,830 $31,721 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 7,272 7,756 Other expense, net* 207 144 Income before income taxes 7,065 7,612 Provision for income taxes 1,637 2,679 Net income including noncontrolling interest 5,428 4,933 Less: Net income attributable to noncontrolling interest 14 11 Net income attributable to 3M $5,414 $4,922 * Interest expense, gross is $350 million in 2018 and $322 million in 2017. 2018 2017 $2,853 $3,053 380 1,076 5,085 4,975 4,366 4,034 741 937 349 266 3M COMPANY Consolidated Balance Sheets At December 31 ($ millions) Current assets Cash and cash equivalents Marketable securities Accounts receivable Total inventories Prepaids Other current assets Total current assets Property, plant and equipment, net Goodwill Intangible assets-net Other assets Total assets Current liabilities Short-term borrowings and current portion of long-term debt Accounts payable Accrued payroll Accrued income taxes Other current liabilities Total current liabilities 13,774 14,341 8,738 8,866 10,051 10,513 2,657 2,936 1,345 1,395 $36,565 $38,051 $1,211 2,266 749 $1,853 1,945 870 243 310 2,775 7,244 2,709 7,687 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 40,701 39,179 Treasury stock (29,626) (25,887) Accumulated other comp income (6,866) (7,026) Total 3M Company shareholders' equity 9,861 11,627 Noncontrolling interest 52 Total equity 9,913 11,686 Total liabilities and equity $36,565 $38,051 In 2018, 3M's return on equity (ROE) is 50.39% and its return on net operating assets (RNOA) is 25.85%. 59 Required PAT). Assume rate of 22%. a. Compute net nonoperating expense (NNE) and net operating profit after tax Note: Round answers to the nearest million. 2018 NNE: $ 161 million 2018 NOPAT: $ 5,589 million b. Compute net nonoperating obligations (NNO). 2018 NNO: $ 11,389 million 2017 NNO: $ 9,820 million c. Compute financial leverage (FLEV). Note: Round your answer to three decimal places (for example, enter 6.776 for 6.77555). 0.982 d. Compute NNEP and Spread. Note: Round percentages to two decimal places (for example, enter 6.66% for 6.6555%). NNEP: 1.05 * % Spread: 24.8 * % 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: 1.0025 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. +( FLEV x Spread + 1.0025 x ) = RNOA X NCI Ratio ROE 25.85 % 0.982 24.8 % X X 50.33 % XStep by Step Solution
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