Use the information below for 3M Company to answer the requirements (perform these computations from the perspective of a 3M shareholder). 2014 ($millions) Sales Net income, consolidated Net income attributable to 3M shareholders Assets Total equity Equity attributable to 3M shareholders a. Compute return on equity (ROE). Round answer to two decimal places (ex: 0.12345= 12.35%) Profit margin 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. 2015 $30,674 5,056 5,048 32,898 $31,389 11,747 13,142 11,708 13,109 Asset turnover 96 Financial leverage c. Compute ROA. Round answer to two decimal places (ex: 0.12345 = 12.35%) ROA 96

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Compute and Interpret Measures for DuPont Disaggregation Analysis
Use the information below for 3M Company to answer the requirements (perform these computations from the perspective of a 3M shareholder).
2014
($millions)
Sales
Net income, consolidated
Net income attributable to 3M shareholders
Assets
Total equity
Equity attributable to 3M shareholders
a. Compute return on equity (ROE).
Round answer to two decimal places (ex: 0.12345= 12.35%)
%
2015
$30,674
5,056
5,048
32,898 $31,389
11,747 13,142
11,708 13,109
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
Asset turnover
%
Financial leverage
c. Compute ROA.
Round answer to two decimal places (ex: 0.12345= 12.35%)
ROA
%
d. Compute adjusted ROA (assume a statutory tax rate of 37% and pretax net interest expense of $123).
Round answer to two decimal places (ex: 0.12345= 12.35%)
%
Transcribed Image Text:Compute and Interpret Measures for DuPont Disaggregation Analysis Use the information below for 3M Company to answer the requirements (perform these computations from the perspective of a 3M shareholder). 2014 ($millions) Sales Net income, consolidated Net income attributable to 3M shareholders Assets Total equity Equity attributable to 3M shareholders a. Compute return on equity (ROE). Round answer to two decimal places (ex: 0.12345= 12.35%) % 2015 $30,674 5,056 5,048 32,898 $31,389 11,747 13,142 11,708 13,109 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 Asset turnover % Financial leverage c. Compute ROA. Round answer to two decimal places (ex: 0.12345= 12.35%) ROA % d. Compute adjusted ROA (assume a statutory tax rate of 37% and pretax net interest expense of $123). Round answer to two decimal places (ex: 0.12345= 12.35%) %
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