118-SP'07 MIDTERM EXAM-3M-KEY

118-SP'07 MIDTERM EXAM-3M-KEY - ECON 118 SP’07-MIDTERM...

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Unformatted text preview: ECON 118- SP’07-MIDTERM KEY - P1 Econ 118–Financial Statement Analysis–SP’07 Midterm Exam – 100 points ANSWER KEY All questions are based on the annual report of 3M Company. 3M Company is the worldwide company which brings you Scotch® Pressure-Sensitive Tapes, Post-It® Notes, and many, many other office, commercial, industrial and medical products. 3M is a component of the Dow Jones Industrial Average. The questions that follow are based on selected pages from 3M’s annual report, which are attached. Use year-end numbers where a formula calls for an average. The U.S. federal statutory tax rate was 35% for all periods. Show all your work. Clearly label all answers. Watch your pluses and minuses! Question 1 – Return on assets (45 points) Compute return on assets for 2006 and 2005. Disaggregate ROA into its two components and explain the significance of each component. Evaluate the results. ROA NI + (1 - t) Int exp + MI in NI +/- After-tax special items ROA = ___________________________________________________ Year-end (vs average) total assets...
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118-SP'07 MIDTERM EXAM-3M-KEY - ECON 118 SP’07-MIDTERM...

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