Compute Measures for DuPont Disaggregation Analysis

Use the information below for 2018 for 3M Company to answer the requirements

($ millions)	2018	2017
Sales	$32,765
Net income, consolidated	5,363
Net income attributable to 3M shareholders	5,349
Pretax interest expense	207
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) from the perspective of a 3M shareholder.

Note: 1. Select the appropriate numerator and denominator used to compute ROE from the drop-down menu options. 2. Enter the numerator and denominator amounts to compute ROE.

	Numerator	Denominator	ROE
	AnswerSalesNet income consolidatedNet income consolidated (adjusted)Net income attributable to 3M shareholdersPretax interest expenseAverage assetsAverage total equityAverage equity attributable to 3M shareholders	AnswerSalesNet income consolidatedNet income consolidated (adjusted)Net income attributable to 3M shareholdersPretax interest expenseAverage assetsAverage total equityAverage equity attributable to 3M shareholders
	Answer	Answer

b. Compute the DuPont model component measures for profit margin, asset turnover, and financial leverage. (Perform these computations from a consolidated perspective).

Profit Margin (PM)

Note: 1. Select the appropriate numerator and denominator used to compute PM from the drop-down menu options. 2. Enter the numerator and denominator amounts to compute PM.

	Numerator	Denominator	PM
	AnswerSalesNet income consolidatedNet income consolidated (adjusted)Net income attributable to 3M shareholdersPretax interest expenseAverage assetsAverage total equityAverage equity attributable to 3M shareholders	AnswerSalesNet income consolidatedNet income consolidated (adjusted)Net income attributable to 3M shareholdersPretax interest expenseAverage assetsAverage total equityAverage equity attributable to 3M shareholders
	Answer	Answer

Asset turnover (AT)

Note: 1. Select the appropriate numerator and denominator used to compute AT from the drop-down menu options. 2. Enter the numerator and denominator amounts to compute AT.

	Numerator	Denominator	AT
	AnswerSalesNet income consolidatedNet income consolidated (adjusted)Net income attributable to 3M shareholdersPretax interest expenseAverage assetsAverage total equityAverage equity attributable to 3M shareholders	AnswerSalesNet income consolidatedNet income consolidated (adjusted)Net income attributable to 3M shareholdersPretax interest expenseAverage assetsAverage total equityAverage equity attributable to 3M shareholders
	Answer	Answer

Financial leverage (FL)

Note: 1. Select the appropriate numerator and denominator used to compute FL from the drop-down menu options. 2. Enter the numerator and denominator amounts to compute FL.

	Numerator	Denominator	FL
	AnswerSalesNet income consolidatedNet income consolidated (adjusted)Net income attributable to 3M shareholdersPretax interest expenseAverage assetsAverage total equityAverage equity attributable to 3M shareholders	AnswerSalesNet income consolidatedNet income consolidated (adjusted)Net income attributable to 3M shareholdersPretax interest expenseAverage assetsAverage total equityAverage equity attributable to 3M shareholders
	Answer	Answer

c. Compute ROA

Note: 1. Select the appropriate numerator and denominator used to compute ROA from the drop-down menu options. 2. Enter the numerator and denominator amounts to compute ROA.

	Numerator	Denominator	ROA
	AnswerSalesNet income consolidatedNet income consolidated (adjusted)Net income attributable to 3M shareholdersPretax interest expenseAverage assetsAverage total equityAverage equity attributable to 3M shareholders	AnswerSalesNet income consolidatedNet income consolidated (adjusted)Net income attributable to 3M shareholdersPretax interest expenseAverage assetsAverage total equityAverage equity attributable to 3M shareholders
	Answer	Answer

d. Compute adjusted ROA (assume a statutory tax rate of 22% and pretax net interest expense of $207).

Note: 1. Select the appropriate numerator and denominator used to compute adjusted ROA from the drop-down menu options. 2. Enter the numerator and denominator amounts to compute adjusted ROA.

	Numerator	Denominator	ROA
	AnswerSalesNet income consolidatedNet income consolidated (adjusted)Net income attributable to 3M shareholdersPretax interest expenseAverage assetsAverage total equityAverage equity attributable to 3M shareholders	AnswerSalesNet income consolidatedNet income consolidated (adjusted)Net income attributable to 3M shareholdersPretax interest expenseAverage assetsAverage total equityAverage equity attributable to 3M shareholders
	Answer	Answer