26 Jun Compute net operating profit after
Question
Analysis and Interpretation of Profitability
Balance sheets and income statements for 3M Company follow.
Consolidated Statements of Income
Years ended December 31 ($ millions) 2012 2011 2010
Net sales $29,904 $ 29,611 $ 226,662
Operating expenses
Cost of sales 15,685 15,693 13,831
Selling, general and administrative expenses 6,102 6,170 5,479
Research, development and related expenses 1,634 1,570 1,434
—
—
—
Total operating expenses 23,421
23,433
20,744
Operating income 6,483 6,178 5,918
Interest expenses and income
Interest expense 171 186 201
Interest income (39)
(39)
(38)
Total interest expense–net 132
147
163
Income before income taxes 6,351 6,031 5,755
Provision for income taxes 1,840
1,674
1,592
Net income including noncontrolling interest $4,511 $4,357 $4,163
Less: Net income attributable to noncontrolling interest 67 74 78
Net income attributable to 3M $ 4,444 $ 4,283 $ 4,085
Consolidated Balance Sheets
($ millions) 2012 2011
Assets
Current Assets
Cash and cash equivalents $ 2,883 $ 2,219
Marketable securities-current 1,648 1,461
Accounts receivable-net of allowances of $105 and $108 4,061 3,867
Inventories
Finished goods 1,754 1,536
Work in process 1,186 1,061
Raw materials and supplies 897
819
Total inventories 3,837 3,416
Other current assets 1,201
1,277
Total current assets 13,630
12,240
Marketable securities-noncurrent 1,162 896
Investments 163 155
Property, plant and equipment 22,525 21,166
Less: Accumulated depreciation (14,147)
(13,500)
Property, plant and equipment-net 8,378 7,666
Goodwill 7,385 7,047
Intangible assets-net 1,925 1,916
Prepaid pension benefits 16 40
Other assets 1,217
1,656
Total assets $ 33,876 $ 31,616
Liabilities
Current liabilities
Short-term borrowings and current portion of long-term debt $ 1,085 $ 682
Accounts payable 1,762 1,643
Accrued payroll 701 676
Accrued income taxes 371 355
Other current liabilities 2,281
2,085
Total current liabilities 6,200 5,441
Long-term debt 4,916 4,484
Pension and postretirement benefits 3,086 3.972
Other liabilities 1,634
1,857
Total liabilities $15,836
$15,754
Equity
3M Company shareholders’ equity $9 $9
Additional paid-in capital 4,044 3,767
Retained earnings 30,679 28,348
Treasury stock (12,407) (11,679)
Accumulated other comprehensive income (loss) (4,750)
(5,025)
Total 3M Company shareholders’ equity 17,575 15,420
Noncontrolling interest 465
442
Total equity $18,040
$15,862
Total liabilities and equity $33,876 $31,616
(a) Compute net operating profit after tax (NOPAT) for 2012. Assume that the combined federal and statutory rate is: 37.0% (Round your answer to the nearest whole number.)
2012 NOPAT =Answer
($ millions)
(b) Compute net operating assets (NOA) for 2012 and 2011. Treat noncurrent investments as a nonoperating item.
2012 NOA =Answer($ millions)
2011 NOA =Answer($ millions)
(c) Compute and 3M’s RNOA, net operating profit margin (NOPM) and net operating asset turnover (NOAT) for 2012. (Round your answers to two decimal places. Do not round until your final answer. Do not use NOPM x NOAT to calculate RNOA.)
2012 RNOA =Answer%
2012 NOPM =Answer%
2012 NOAT =Answer
(d) Compute net nonoperating obligations (NNO) for 2012 and 2011.
2012 NNO =Answer($ millions)
2011 NNO =Answer($ millions)
(e) Compute return on equity (ROE) for 2012. (Round your answers to two decimal places. Do not round until your final answer.)
2012 ROE =Answer%
(f) What is the nonoperating return component of ROE for 2012? (Round your answers to two decimal places.)
2012 nonoperating return =Answer%
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