P4-41. Analysis and Interpretation of Profitability Balance sheets and income statements for 3M Company follow. LO4, 5, 3M Comp som M 2017 $31,657 3M COMPANY Consolidated Statements of Income For Years Ended December 31 ($ millions) 2018 Net sales... $32,765 Operating expenses Cost of sales. 16,682 Selling, general and administrative expenses 7,602 Research, development and related expenses 1,821 Gain on sale of businesses (547) Total operating expenses 25,558 Operating income 7,207 Other expense, net 207 Income before income taxes 7,000 Provision for income taxes 1,637 Net income including noncontrolling interest 5,363 Less: Net income attributable to noncontrolling interest. 14 Net income attributable to 3M. $ 5,349 16,055 6,626 1,870 (586) 23,965 7,692 144 7,548 2,679 4,869 11 $ 4,858 * Interest expense, gross is $350 million in 2018 and $322 million in 2017. 2018 2017 3M COMPANY Consolidated Balance Sheets At December 31 ($ 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 $ 2,853 380 5,020 4,366 741 349 13,709 8,738 10,051 2,657 1,345 $36,500 $ 3,053 1,076 4,911 4,034 937 266 14,277 8,866 10,513 2,936 1,395 $37,987 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 Total liabilities $ 1,211 2,266 749 243 2,775 7,244 13,411 2,987 3,010 26,652 $ 1,853 1,945 870 310 2,709 7,687 12,096 3,620 2,962 26,365 continued continued from previous page 2018 2017 3M COMPANY Consolidated Balance Sheets At December 31 ($ millions) 3M Company shareholders' equity Common stock par value Additional paid-in capital. Retained earnings Treasury stock . Accumulated other comprehensive income (loss) Total 3M Company shareholders' equity Noncontrolling interest. Total equity. Total liabilities and equity. 9 5,643 40,636 (29,626) (6,866) 9,796 52 9 5,352 39,115 (25,887) (7,026) 11,563 59 11,622 $37,987 9,848 $36,500 P4-43. Analysis and Interpretation of Liquidity and Solvency Refer to the financial information of 3M Company in P4-41 to answer the following requirements. Required a. Compute the current ratio and quick ratio for 2018 and 2017. Comment on any observed trends. b. Compute times interest earned and liabilities-to-equity ratios for 2018 and 2017. Comment on any noticeable changes. c. Summarize your findings about the company's liquidity and solvency. Do you have any concerns about its ability to meet its debt obligations