Question

Compute Measures for DuPont Disaggregation Analysis Use the information below for 2018 for 3M Company to answer the requirements (perform these computations from the perspective of a 3M shareholder). ($ millions) 2018 2017 Sales $32,765 Net income, consolidated 5,363 Net income attributable to 3M shareholders 5,349 Assets 36,500 $37,987 Total equity 9,848 11,622 Equity attributable to 3M shareholders 9,796 11,563 a. Compute return on equity (ROE). Round answer to two decimal places (ex: 0.12345 = 12.35%) 54.6 X % b. Compute the DuPont model component measures for profit margin, asset turnover, and financial leverage. • Round profit margin to two decimal places (ex: 0.12345 = 12.35%) • Round asset turnover and financial leverage to three decimal places. Profit margin 16.33 X % Asset turnover 0.88 Financial leverage 3.73 x c. Compute ROA Round answer to two decimal places (ex: 0.12345 = 12.35%) 14.36 X %

Answer 1

solutions 5349 (a) Return on Equity Net Income Total equity 9796 = sy.60% Net Income Net sales 5349 profit margin- 32765 16-33 4 Asset Turn over a Net sales Average Dlal assets 32765 0.88 37 2 apky financial Leverage = Total Assets Total Equity 36500 9796 3.73

(C) Return on Assets = Net Income Average Total assets 14:36%, (el) Adjusted ROA = Alet income - petar Interest expense -Tan Average To tal assets 5349–207 - (5349-201)x22;. (365 987 136500+ 37987 ) 2 You 2.96 37243.50 10.75%