$\backslash$table$[[$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,$26,652,26,365],[3$M Company shareholders' equity,,$],[$Common stock, par value,$9,643,5,352],[$Additional paid$-$in capital,$40,636,39,115],[$Retained earnings,$(29,626),(25,887)],[$Treasury stock,$(6,866),(7,026)],[$Accumulated other comprehensive income $($loss$),9,796,11,563],[$Total $3$M Company shareholders' equity,$52,59],[$Noncontrolling interest,$9,848,11,622],[$Total equity,$$36,500,$$$37,987],[$Total liabilities and equity,$22,009,],[$Combined federal and state statutory tax rate,$50,09\%,],[$ROE$,25,89\%,],[$RNOA$,,]]$ Direct Computation of Nonoperating Return

Balance sheets and income statements for $3$M Company follow.

$\backslash$table$[[3$M COMPANY$],[$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 $3$M$,$$$5,349,$$$4,858],[*$Interest expense, gross,$$350,$$$322]]$

$\backslash$table$[[\backslash$table$[[3$M 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]]$ b$.$ Compute net nonoperating obligations $($NNO$).$

c$.$ Compute financial leverage $($FLEV$).$

d$.$ Compute NNEP and Spread.

e$.$ Compute the noncontrolling interest ratio $($ NCI ratio$).$

f$.$ Confirm the relation: Spread

a$.$ Compute net nonoperating expense $($NNE$)$ and net operating profit after tax $($NOPAT$).$ Assume a tax rate of $22\%.$

$\backslash$table$[[$NNE$],[$$$,10,920,000$ x$]]$

NOPAT

$$3,463\mathrm{.}98$

b$.$ Compute net nonoperating obligations $($NNO$).$

$\backslash$table$[[$Year$,$NNO,$],[2018,$$$,16,397\backslash$times $],[2017,$$$,14,386\backslash$times $]]$