Finance-MBA520 - Project #3 – Financial Reporting and Analysis Deliverables

MBA520 - Project #3 – Financial Reporting and Analysis
Deliverables:
1. Prepare an analysis report using Excel based on items a-s below. Analyze
the financials for 3M - 10-Ks for 2013 and 2014. Your report should show
your computations (including the inputs into each formula), as well as
provide a brief explanation of each ratio, and brief explanation of what you
learned from analyzing the 2013 and 2014 trend for each ratio.
2. Using Word summarize your findings in a 2 page memo to your instructor
using your calculations in your analysis report to support your statements
(items t, u, and v below can be explained here).
3. When finished upload your files (1 Excel spreadsheet and 1 Word document)
to the link in the Blackboard classroom…under Assignments, in the Project’s
folder.
SEC EDGAR Instructions (reminder from project #1) - Log onto the SEC EDGAR
search site using the following:
http://www.sec.gov/edgar/searchedgar/webusers.htm
Review 3M’s 10-Ks for 2013 (filed 2/13/2014) and 2014 (filed 2/12/2015) and
calculate the below items. Use the Boolean search link; then type the following
search parameters: 3M 10-K for the years 2013 (this is a drop down menu) – 2015
[the company name in the company name box along with the report you are
searching for -10-K report]. Find 3M and click on the HTML link to the right.
a. Compute net operating profit after tax (NOPAT) for 2013 and 2014. Assume that the
combined federal and state statutory tax rate is 37% (on page 70 of the 2014 10-K you
will see a different combined rate, but to be consistent with Problem 4-36, use 37%).
b. Compute net operating assets (NOA) for 2013 and 2014. If noncurrent investments
are reported, treat them as nonoperating items.
c. Compute RNOA; also, compute net operating profit margin (NOPM) and net
operating asset turnover (NOAT) for 2013 and 2014. Confirm the relation: RNOA=
NOPM X NOAT.
d. Compute net nonoperating obligations (NNO) for 2013 and 2014. Confirm the
relation: NOA = NNO + Stockholders’ equity.
e. Compute the asset turnover for 2013 and 2014.
f. Compute the return on assets for 2013 and 2014.

g. Compute return on equity (ROE) for 2013 and 2014.
h. What is the nonoperating return component of ROE for 2013 and 2014.
i. Explain the difference between ROE and RNOA. What inference can you draw from
this comparison?
j. Compute the current ratio and quick ratio for 2013 and 2014. Comment on any
observed trends.
k. Compute times interest earned and liabilities-to-equity ratios for 2013 and 2014.
Comment on any changes.
l. Compute net working capital for 2013 and 2014.
m. Compute accounts receivable turnover for 2013 and 2014.
n. Compute inventory turnover for 2013 and 2014.
o. Compute operating cash flow to current liabilities for 2013 and 2014.
p. Compute operating cash flow to capital expenditures for 2013 and 2014.
q. Trend cash from operating, investing, and financing operations. Comment on your
findings.
r. Compute EPS and Diluted EPS for 2013 and 2014 – check your calculation to the
reported EPS in the reported financials.
s. Who are the auditors for 3M? Explain the auditors’ findings for both years (2013 and
2014).
t. Summarize your findings about the company’s liquidity and solvency. Do you have
any concerns about its ability to meet its debt obligations? Explain.
u. Should your company invest in 3M? Explain.
v. Would 3M make a good personal investment? Explain.