(a) Compute net operating profit after tax (NOPAT) for 2018. Assume that the combined federal and...

(a) Compute net operating profit after tax (NOPAT) for 2018. Assume that the combined federal and state statutory tax rate is 22%.

2018 NOPAT = $5,621 millions

( operating income*(1-tax rate))

($7,207*(1-0.22))

(b) Compute net operating assets (NOA) for 2018 and 2017.

2018 NOA=$27,234 millions ($33,267-$6,033)

2017 NOA=$28,024 millions ($33858-$5,834)

(Operating assets - operating liabilities)

(c) Compute and disaggregate 3M’s RNOA into net operating profit margin (NOPM) and net operating asset turnover (NOAT) for 2018. Demonstrate that RNOA = NOPM × NOAT. (Do not use NOPM x NOAT to calculate RNOA.)

2018 RNOA = 20.35%

( NOPAT*100/ Average NOA)

[$5,621*100/{($27,234+$28,024)/2}]

2018 NOPM = 17.16 %

(NOPAT/ Revenue)

($5,621*100/$32,765)

2018 NOAT = 1.19 times

(Revenue/ Avg. NOA)

($32,765/ $27,629)

disaggregate 3M’s RNOA:-

RNOA (NOPAT/Avg.

NOA) = (NOPAT/ sales)*(sales/ avg. NOA)

20.35% = (17.16%*1.19=20.42)

(d)  Compute return on equity (ROE) for 2018. (Round your answers to two decimal places. Do not round until your final answer.)

2018 ROE = 15.88%

ROE= (operating return + non operating rerun)/(average stockholders equity)