Question

Balance sheets and income statements for 3M Company follow. Consolidated Statements of Income Years ended December 31 ($ millions) 2009 2008 2007 Net sales $23,123 $25,269 $24.462 Operating expenses Cost of sales 12.109 13.379 12,735 Selling. general and administrative expenses 4,907 5,245 5.015 Research, development and related expenses 1,293 1,404 1,368 Loss/(gain) from sale of business 23 (849) Total operating expenses 18.309 20,051 18.269 Operating income 4.814 5.218 6.193 Interest expenses and income Interest expense 219 215 210 Interest income (37) (105) (132) Total interest expense 182 11078 Income before income taxes 4,632 5.108 6.115 Provision for income taxes 1.388 1.588 1.964 Net income including noncontrolling interest 3.244 3.520 Less: Net income attributable to noncontrolling interest 60 Net income $ 3.193 $3,460 54,096 55

Answer 1

1. 2009 NOPAT -

Income before tax - 4632

Taxes @36.1% - (1672)

NOPAT - 2960

2.

Non Operating Assets ( in Millions)
Particulars	2008	2009
Cash & Equivalents	1849	3040
Market Securities	373	744
Market Securities - Non Current	352	825
Total	2574	4609

3.

	Particulars	2009
	Operating InCome	4819
	Less : Taxes @36.10%	1739.66
A	Net Operating Income after taxes	3079.34
B	Sales	23123
	NOPM ( A/B*100)	13.32

	Particulars	2,009.00	2,008.00
	Operating Asset
	Account receivables net	3,250.00	3,195.00
	Total Inventories	2,639.00	3,013.00
	Other Current Assets	1,122.00	1,168.00
	Property, Plant & Equip - Net	7,000.00	6,886.00
	Other Assets	1,275.00	1,659.00
A	Total Operating Asset	15,286.00	15,921.00
	Operating Liabilities
	Accounts Payable	1,453.00	1,301.00
	Accrued payroll	680.00	644.00
	Accrued Income taxes	252.00	350.00
	Other Current Liabilities	1,899.00	1,992.00
	Other Liabilities	1,727.00	1,637.00
B	Total Operating Liabiliites	6,011.00	5,924.00
C = A-B	Net Operating Assets (NOA)	9,275.00	9,997.00
	NOAT = Revenues / Average NOA
	Revenues		23123
	Average NOA	(9275+9997)/2	9636
	NOAT		2.40

NOPAT	Net Operating Income after taxes		3079.34
Average NOA	Average Operating Assets (NOA)	(9275+9997)/2	9636
	RNOA = NOPAT/Average NOA		31.96

ROE = Net Income/Average Shareholder
Net Income		3192
Average Shareholders	(13302+10304)/2	11803
ROE	27.04