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Analysis and Interpretation of Liquidity and Solvency Balance sheets and income statements for 3M Company follow. 3M COMPANY Consolidated Statements of Income For Years Ended December 31 ($ millions) Net sales Operating expenses Cost of sales 16,682 16,055 7,602 6,626 1,821 1,870 (547) (586) 25,558 23,965 7,207 7,692 207 144 7,000 7,548 Provision for income taxes 1,637 2,679 Net income including noncontrolling interest 5,363 4,869 Less: Net income attributable to noncontrolling interest 14 11 Net income attributable to 3M $5,349 $4,858 * Interest expense, gross is $350 million in 2018 and $322 million in 2017. Selling, general and administrative expenses Research, development and related expenses Gain on sale of businesses Total operating expenses Operating income Other expense, net* Income before income taxes Current assets 3M COMPANY Consolidated Balance Sheets At December 31 (S millions) Cash and cash equivalents Marketable securities Accounts receivable Total inventories Prepaids Other current assets Total current assets Property, plant and equipment, net Goodwill Intangible assets-net Other assets Total assets Current liabilities 2018 2017 $32,765 $31,657 Long-term debt Pension and postretirement benefits Other liabilities Total liabilities 2018 2017 $2,853 $3,053 380 1,076 5,020 4,911 4,366 4,034 741 937 349 266 13,709 14,277 8,738 8,866 10,051 10,513 2,657 2,936 1.345 1,395 $36,500 $37,987 Short-term borrowings and current portion of long-term debt $1,211 Accounts payable Accrued payroll Accrued income taxes Other current liabilities Total current liabilities $1,853 2,266 1,945 749 870 243 310 2,775 2,709 7,244 7.687 13,411 12.096 2,987 3,620 3,010 2,962 $26.652 $26.365

Analysis and Interpretation of Liquidity and Solvency Balance sheets and income statements for 3M Company follow. 3M COMPANY Consolidated Statements of Income For Years Ended December 31 ($ millions) Net sales Operating expenses Cost of sales 16,682 16,055 7,602 6,626 1,821 1,870 (547) (586) 25,558 23,965 7,207 7,692 207 144 7,000 7,548 Provision for income taxes 1,637 2,679 Net income including noncontrolling interest 5,363 4,869 Less: Net income attributable to noncontrolling interest 14 11 Net income attributable to 3M $5,349 $4,858 * Interest expense, gross is $350 million in 2018 and $322 million in 2017. Selling, general and administrative expenses Research, development and related expenses Gain on sale of businesses Total operating expenses Operating income Other expense, net* Income before income taxes Current assets 3M COMPANY Consolidated Balance Sheets At December 31 (S millions) Cash and cash equivalents Marketable securities Accounts receivable Total inventories Prepaids Other current assets Total current assets Property, plant and equipment, net Goodwill Intangible assets-net Other assets Total assets Current liabilities 2018 2017 $32,765 $31,657 Long-term debt Pension and postretirement benefits Other liabilities Total liabilities 2018 2017 $2,853 $3,053 380 1,076 5,020 4,911 4,366 4,034 741 937 349 266 13,709 14,277 8,738 8,866 10,051 10,513 2,657 2,936 1.345 1,395 $36,500 $37,987 Short-term borrowings and current portion of long-term debt $1,211 Accounts payable Accrued payroll Accrued income taxes Other current liabilities Total current liabilities $1,853 2,266 1,945 749 870 243 310 2,775 2,709 7,244 7.687 13,411 12.096 2,987 3,620 3,010 2,962 $26.652 $26.365

Financial Accounting: The Impact on Decision Makers
Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Gary A. Porter, Curtis L. Norton
Chapter13: Financial Statement Analysis
Section: Chapter Questions
Problem 13.8E
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Analysis and Interpretation of Liquidity and Solvency Balance sheets and income statements for 3M Company follow. 3M COMPANY Consolidated Statements of Income For Years Ended December 31 ($ millions) Net sales Operating expenses Cost of sales Selling, general and administrative expenses Research, development and related expenses Gain on sale of businesses Total operating expenses 16,682 16,055 7,602 6,626 1,821 1,870 (547) (586) 25,558 23,965 Operating income 7,207 7,692 Other expense, net* 207 144 Income before income taxes 7,000 7,548 Provision for income taxes 1,637 2,679 Net income including noncontrolling interest 5,363 4,869 Less: Net income attributable to noncontrolling interest 14 11 Net income attributable to 3M $5,349 $4,858 * Interest expense, gross is $350 million in 2018 and $322 million in 2017. Current assets 3M COMPANY Consolidated Balance Sheets At December 31 ($ millions) Cash and cash equivalents Marketable securities Accounts receivable Total inventories Prepaids Other current assets Total current assets Property, plant and equipment, net Goodwill Intangible assets-net Other assets Total assets Current liabilities 2018 2017 $32,765 $31,657 Long-term debt Pension and postretirement benefits Other liabilities Total liabilities 2018 2017 $2,853 $3,053 380 1,076 5,020 4,911 4,366 4,034 741 937 349 266 13,709 8,738 10,051 10,513 2,657 2,936 1,345 1,395 $36,500 $37,987 14,277 8,866 Short-term borrowings and current portion of long-term debt $1,211 $1,853 Accounts payable 2,266 1,945 Accrued payroll 749 870 Accrued income taxes 243 310 Other current liabilities 2.775 2,709 Total current liabilities 7,244 7,687 13,411 12,096 2,987 3,620 3,010 2,962 $26,652 $26.365
Transcribed Image Text:Analysis and Interpretation of Liquidity and Solvency Balance sheets and income statements for 3M Company follow. 3M COMPANY Consolidated Statements of Income For Years Ended December 31 ($ millions) Net sales Operating expenses Cost of sales Selling, general and administrative expenses Research, development and related expenses Gain on sale of businesses Total operating expenses 16,682 16,055 7,602 6,626 1,821 1,870 (547) (586) 25,558 23,965 Operating income 7,207 7,692 Other expense, net* 207 144 Income before income taxes 7,000 7,548 Provision for income taxes 1,637 2,679 Net income including noncontrolling interest 5,363 4,869 Less: Net income attributable to noncontrolling interest 14 11 Net income attributable to 3M $5,349 $4,858 * Interest expense, gross is $350 million in 2018 and $322 million in 2017. Current assets 3M COMPANY Consolidated Balance Sheets At December 31 ($ millions) Cash and cash equivalents Marketable securities Accounts receivable Total inventories Prepaids Other current assets Total current assets Property, plant and equipment, net Goodwill Intangible assets-net Other assets Total assets Current liabilities 2018 2017 $32,765 $31,657 Long-term debt Pension and postretirement benefits Other liabilities Total liabilities 2018 2017 $2,853 $3,053 380 1,076 5,020 4,911 4,366 4,034 741 937 349 266 13,709 8,738 10,051 10,513 2,657 2,936 1,345 1,395 $36,500 $37,987 14,277 8,866 Short-term borrowings and current portion of long-term debt $1,211 $1,853 Accounts payable 2,266 1,945 Accrued payroll 749 870 Accrued income taxes 243 310 Other current liabilities 2.775 2,709 Total current liabilities 7,244 7,687 13,411 12,096 2,987 3,620 3,010 2,962 $26,652 $26.365
3M Company shareholders' equity Common stock par value Additional paid-in capital Retained earnings Treasury stock Accumulated other comprehensive income (loss) Total 3M Company shareholders' equity Noncontrolling interest Total equity Total liabilities and equity Required a. Compute the current ratio and quick ratio for 2018 and 2017. Note: Round your answers to two decimal places (for example, enter 6.78 for 6.77555). 2017 Current ratio Quick ratio 2018 1.89 1.09 x Times interest earned Liabilities-to-equity 1.86 1.04 * b. Compute times interest earned and liabilities-to-equity ratios for 2018 and 2017. Note: Round your answers to two decimal places (for example, enter 6.78 for 6.77555). 2018 25.91 X 2.71 ✓ 9 9 5,643 5,352 40,636 39,115 (29,626) (25,887) (6,866) (7,026) 9,796 11,563 52 59 9,848 11,622 $36,500 $37,987 2017 33.81 x 2.27
Transcribed Image Text:3M Company shareholders' equity Common stock par value Additional paid-in capital Retained earnings Treasury stock Accumulated other comprehensive income (loss) Total 3M Company shareholders' equity Noncontrolling interest Total equity Total liabilities and equity Required a. Compute the current ratio and quick ratio for 2018 and 2017. Note: Round your answers to two decimal places (for example, enter 6.78 for 6.77555). 2017 Current ratio Quick ratio 2018 1.89 1.09 x Times interest earned Liabilities-to-equity 1.86 1.04 * b. Compute times interest earned and liabilities-to-equity ratios for 2018 and 2017. Note: Round your answers to two decimal places (for example, enter 6.78 for 6.77555). 2018 25.91 X 2.71 ✓ 9 9 5,643 5,352 40,636 39,115 (29,626) (25,887) (6,866) (7,026) 9,796 11,563 52 59 9,848 11,622 $36,500 $37,987 2017 33.81 x 2.27
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