Project#1: Examining the annual report – 3M Company (Due on Oct. 9th )
A manager's primary goal is to maximize the value of his or her firm's stock, which is the present
value of the firm's future cash flow stream. A look at the firm’s financial statements helps give
some clue as to how a firm generates its cash flows.
Let's examine Minnesota Mining and Manufacturing (otherwise known as 3M) Company's
financial information, which can be found by accessing 3M’s main front page
(http://www.mmm.com) and selecting the Investor Relations link at the bottom of the page. Use
data in the financial statements to answer the following questions.
a. Looking at the firm’s financial statements of year 2015, what is the amount of total assets
on 3M’s balance sheet? What percentage is fixed assets, such as plant and equipment, and
what percentage is current assets?
b. Does 3M have a lot of long-term debt? What are the chief ways in which 3M has
c. From 3M’s Financial Summary, describe the state of 3M’s costs (relative to sales),
operating income, and its profitability ratios.
d. Has 3M’s research and development expenses grown as fast as sales? What does this
indicate, should investors be worried?
e. How is the stock price performance over the past 5 years? Discuss one or two stories
about the firm’s stock performance.
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