Cyberproblem

Financial Statements, Cash flow, and Taxes - 3M Company

A manager's primary goal is to maximize the value of his or her firm's stock. The stock's value is calculated as the present value of the firm's future cash flow stream. A study of a firm's financial statements provides clues to its past, present, and likely future performance. Managers must understand financial statements because their actions have a direct impact on them. Managers and investors alike need to know how to read and interpret financial statements.

Let's examine Minnesota Mining and Manufacturing (otherwise known as 3M) Company's financial statements as reported in its 2001 Annual Report, which can be found at http://www.corporate-ir.net/ireye/ir_site.zhtml?ticker=MMM&script=950.

1. Did 3M have more or less cash as of December 31, 2001 than it did as of December 31, 2000? How does this affect the firm's liquidity?
   
   
2. What was 3M's method for valuing inventory in fiscal year 2001? Refer to the "notes to statements".
   
   
3. What is 3M's total common equity or net worth as of year-end 2001? Is this amount larger or smaller than in 2000?
   
   
4. Look at 3M's consolidated statement of income, which appears before its balance sheet in the annual report. What was 3M's operating income in 2001? Did operating income increase in 2001 when compared against 2000?
   
   
5. What was 3M's net income available to common stockholders for fiscal years 1999, 2000, and 2001?
   
   
6. What was 3M's reported "basic" and "diluted" earnings per share in 2000 and 2001? What is the difference between basic and diluted earnings per share?
   
   
7. Go to http://finance.yahoo.com and obtain a quote for the Minnesota Mining & Manufacturing (ticker: MMM) and look at the company's "Profile". What does Yahoo!Finance report as 3M's Cash and Income available to common? How do these values compare to 3M's annual report values for Cash and Net Income?
   
   
8. Why might there be a discrepancy between 3M's annual report and Yahoo!Finance?