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Hi, I need a complete solution please show the required answer clearly. Direct Computation of Nonoperating Return Balance sheets and income statements for 3M Company
Hi, I need a complete solution please show the required answer clearly. 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 | $350 | $322 |
3M COMPANY | ||
---|---|---|
Consolidated Balance Sheets | ||
At December 31 ($ millions, except per share amount) | 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 assets-net | 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 |
Combined federal and state statutory tax rate | 22.00% | |
ROE | 50.09% | |
RNOA | 25.89% |
a. Compute net nonoperating expense (NNE) and net operating profit after tax (NOPAT). Assume a tax rate of 22%. b. Compute net nonoperating obligations (NNO). c. Compute financial leverage (FLEV). d. Compute NNEP and Spread. e. Compute the noncontrolling interest ratio ( NCl ratio). f. Confirm the relation: ROE=[RNOA+( FLEV Spread )]NCI ratio. ROE mav be different due to rounding
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