Analysis and Interpretation of Profitability Balance sheets and income statements for 3M Company follow. Consolidated Statements...

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Analysis and Interpretation of Profitability Balance sheets and income statements for 3M Company follow. Consolidated Stateme

2007 2006 $1,896 579 $1,447 471 3,102 3,362 1,349 1.235 880795 623 571 2.852 1,149 ($ millions) Assets Current Assets Cash an

Equity 3M Company shareholders equity Additional paid-in capital Retained earnings Treasury stock Accumulated other comprehe

cal Compute net operating profit after tax INOPAT) for 2007. Assume that the combined federal and autory rates 359Round your

business accounting

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Answer 1

Answer #1

Ratios	Formulae	Calculation	Year	Answer($ million)
NOPAT	Operating incomeorEBIT(1-tax rate)	$6193(1-35.9%)	2007	3,969.71
NOA	Operating assets-Operating Liability	Note 1	2007	2,246.00
			2006	1,626.00
RNOA	NOPAT/Avg NOA	$3969.71/2246	2007	176.75%
NOPM	sales-cogs-other expenses-interest-tax/sales	$4096/24462	2007	16.74%
NOAT	Sales/Average Operating assets	24462/(22020+19367)/2	2007	118.21%
NNO	Invested Capital-(total equity+Non-controlling interest)
Return on Equity	Net profit (excl non-controlling interest)/Average equity (incl non-controlling interest)	$3919.72/10853 (note 2)	2007	36%


Note 1
	Operating asset			Operating Liabilities
	Total Assets	24694	21294	Total Liabilities
	Cash and Cash eq	-1896	-1447	Short term borrowings and current portion of Long term Debt
	Non-current marketable securities	-480	-166	Long term debt
	Investments	-298	-314
	Total	22020	19367

	Average (22020+19367/2)	20693.5

Note 2	Calculation of net profit and average equity
	Income before taxes	$ 6,115.00
	Less: Taxes @35.9%	$ 2,195.29
	Income after tax(Net profit)	$ 3,919.72

	Average equity
	2007	$ 11,747.00
	2006	$ 9,959.00
	Average (total equity/2)	$ 10,853.00

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