MBA520-Project 3-Financial Reporting and Analysis

Subject: Business    / Finance
MBA520 – Project #3 – Financial Reporting and Analysis


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.

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).

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:

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.

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