M5-21. Compute ROA, Profit Margin, and Asset Turnover Refer to the balance sheet and income statement information for 3M Company, presented in M5-19 and M5-20. Compute 3M's 2017 return on assets (ROA). Use 35% as the effective tax rate. b. Disaggregate ROA into profit margin (PM) and asset turnover (AT). Confirm that ROA = PM XAT. a. 2017 2016 .. $31,657 $30,109 16,001 6,572 1,850 (586) 15,040 6,222 1,735 (111) 3M COMPANY AND SUBSIDIARIES Year ended December 31 ($ millions) Net sales. .... Operating expenses Cost of sales..... Selling, general and administrative expenses. .. Research, development and related expenses.. Gain on sale of businesses Total operating expenses Operating income. . Interest expense. Interest income. Income before income taxes Provision for income taxes.. Net income including noncontrolling interest 23,837 22,886 7,820 322 (50) 7,223 199 (29) 7,548 2,679 7,053 1,995 $ 4,869 $ 5,058 3M COMPANY AND SUBSIDIARIES December 31 ($ millions) 2017 2016 Assets Cash, cash equivalents and marketable securities Accounts receivablenet of allowances of $103 and $88. Total inventories Prepaids. Other current assets. $ 4,129 4,911 4,034 937 266 $ 2,678 4,392 3,385 821 450 Total current assets Property, plant and equipment-net. Goodwill Intangible assets-net Other assets .. 14,277 8,866 10,513 2,936 1,395 11,726 8,516 9,166 2,320 1,178 Total assets $37,987 2,906 Liabilities and Shareholders' Equity 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. Long-term debt.. Pension and postretirement benefits Other liabilities $ 1,853 1,945 870 310 2,709 $ 972 1,798 678 299 2,472 7,687 12,096 3,620 2,962 6,219 10,678 4,018 1,648 Total liabilities. Total equity Total liabilities and equity $26,365 $11,622 $22,563 $10,343 $32,906 $37,987