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3M Company Common-size Income Statements Dec. 31, 2014 Dec. 31, 2013 Net sales 31,821 30,871 Operating expenses Cost of sales Selling, general & admin. expenses Research &development expenses 16,447 6,469 1,770 7,135 16,106 6,384 1,715 6,666 Operating income Interest expense and income: 142 (33) 109 7,026 2,028 $4,998 145 (41) 104 6,562 1,841 $4,721 Interest expense Interest income Net interest Income before taxes &minority interest Provision for income taxes Net income
IM Company and Subsidiaries Common-size Balance Sheets Dec. 31, 2014 Dec. 31,2013 Cash and cash equivalent Accounts receivable Total inventories Other current assets Total current assets Investments Property, plant and equipment, net 3,337 3,706 1,298 11,765 930 8,489 12,733 575 8,652 7,345 1,688 Intang ble assets, net Other assets Total assets $31,269 33,550 Short-term debt & current portion of L-T debt Accounts payable Accrued payroll $106 $1,683 1,799 Accrued income taxes 417 2,891 ,498 Other current liabilities Total current liabilities 5,998 Long-term debt Other liabilities Total liabilities Stockholders equity, net Total liabilities and stockholders equity 18,127 15,602 17,948 13,142 33,550
a. Compute 3Ms 2014 return on assets (ROA) Assume a tax rate of 35%. Do not round until your final answer. Round answer to one decimal place (ie, 0.2568-25.7%). b. Disaggregate ROA into profit margin (PM) and asset turnover (AT). Confirm ROA-PM ХАТ Do not round until your final answers. Round PM and ROA to onedecimaLplace (i.e. 0.2568-25.7%) Round AT to 3 decimal places Profit margin Asset turnover ROA (PM x AT) Check
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return on assets (ROA) = net income / average total assets net income (2014)$4,998 average total assets ($31,269$33,550)/2 average total assets S 32,409.5 return on assets (ROA) net income/average total assets return on assets (ROA) $4,998/ $32,409.5 return on assets (ROA) 15.4% rofit margin (PM) net income/net sales net sales (2014) 31,821 profit margin (PM) $4,998 $31,821 12 13 14 15 16 17 18 rofit margin (PM) 15.7% asset turnover (AT) = net sales / average total assets asset turnover (AT) $31,821/$32,409.5 0.982 asset turnover (AT)- times ROA (PM AT)- 15.4% 21 Profit margin Asset Turnover ROA (PM AT 15.7% 0.982 15.4% 23 25 26

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