Stock Analysis on Net
Stock Analysis on Net

3M Co. (NYSE:MMM)

Analysis of Goodwill and Intangible Assets

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Goodwill and Intangible Asset Disclosure

3M Co., balance sheet: goodwill and intangible assets

US$ in millions

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Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Goodwill 13,802  13,444  10,051  10,513  9,166 
Customer related intangible assets 4,280  4,316  2,291  2,332  1,939 
Patents 537  538  542  561  602 
Other technology-based intangible assets 2,114  2,124  576  583  524 
Definite-lived tradenames 1,178  1,158  664  678  420 
Other amortizable intangible assets 104  125  125  207  211 
Finite-lived intangible assets, gross carrying amount 8,213  8,261  4,198  4,361  3,696 
Accumulated amortization (3,036) (2,520) (2,182) (2,073) (2,005)
Finite-lived intangible assets, net 5,177  5,741  2,016  2,288  1,691 
Non-amortizable intangible assets (primarily tradenames) 658  638  641  648  629 
Intangible assets, net 5,835  6,379  2,657  2,936  2,320 
Goodwill and intangible assets 19,637  19,823  12,708  13,449  11,486 

Based on: 10-K (filing date: 2021-02-04), 10-K (filing date: 2020-02-06), 10-K (filing date: 2019-02-07), 10-K (filing date: 2018-02-08), 10-K (filing date: 2017-02-09).

Item Description The company
Goodwill Amount after accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. 3M Co.’s goodwill increased from 2018 to 2019 and from 2019 to 2020.
Intangible assets, net Sum of the carrying amounts of all intangible assets, excluding goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges. 3M Co.’s intangible assets, net increased from 2018 to 2019 but then slightly decreased from 2019 to 2020.
Goodwill and intangible assets Sum of the carrying amounts of all intangible assets, including goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges. 3M Co.’s goodwill and intangible assets increased from 2018 to 2019 but then slightly decreased from 2019 to 2020.

Adjustments to Financial Statements: Removal of Goodwill

3M Co., adjustments to financial statements

US$ in millions

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Adjustment to Total Assets
Total assets (as reported) 47,344  44,659  36,500  37,987  32,906 
Less: Goodwill 13,802  13,444  10,051  10,513  9,166 
Total assets (adjusted) 33,542  31,215  26,449  27,474  23,740 
Adjustment to Total 3M Company Shareholders’ Equity
Total 3M Company shareholders’ equity (as reported) 12,867  10,063  9,796  11,563  10,298 
Less: Goodwill 13,802  13,444  10,051  10,513  9,166 
Total 3M Company shareholders’ equity (adjusted) (935) (3,381) (255) 1,050  1,132 

Based on: 10-K (filing date: 2021-02-04), 10-K (filing date: 2020-02-06), 10-K (filing date: 2019-02-07), 10-K (filing date: 2018-02-08), 10-K (filing date: 2017-02-09).

3M Co., Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios: Removal of Goodwill (Summary)

3M Co., adjusted financial ratios

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Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Total Asset Turnover
Reported total asset turnover 0.68 0.72 0.90 0.83 0.92
Adjusted total asset turnover 0.96 1.03 1.24 1.15 1.27
Financial Leverage
Reported financial leverage 3.68 4.44 3.73 3.29 3.20
Adjusted financial leverage — — — 26.17 20.97
Return on Equity (ROE)
Reported ROE 41.84% 45.41% 54.60% 42.01% 49.04%
Adjusted ROE — — — 462.67% 446.11%
Return on Assets (ROA)
Reported ROA 11.37% 10.23% 14.65% 12.79% 15.35%
Adjusted ROA 16.05% 14.64% 20.22% 17.68% 21.27%

Based on: 10-K (filing date: 2021-02-04), 10-K (filing date: 2020-02-06), 10-K (filing date: 2019-02-07), 10-K (filing date: 2018-02-08), 10-K (filing date: 2017-02-09).

Financial ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. 3M Co.’s adjusted total asset turnover ratio deteriorated from 2018 to 2019 and from 2019 to 2020.
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. 3M Co.’s adjusted ROA deteriorated from 2018 to 2019 but then slightly improved from 2019 to 2020.

3M Co., Financial Ratios: Reported vs. Adjusted

Adjusted Total Asset Turnover

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Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
As Reported
Selected Financial Data (US$ in millions)
Net sales 32,184  32,136  32,765  31,657  30,109 
Total assets 47,344  44,659  36,500  37,987  32,906 
Activity Ratio
Total asset turnover1 0.68 0.72 0.90 0.83 0.92
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Net sales 32,184  32,136  32,765  31,657  30,109 
Adjusted total assets 33,542  31,215  26,449  27,474  23,740 
Activity Ratio
Adjusted total asset turnover2 0.96 1.03 1.24 1.15 1.27

Based on: 10-K (filing date: 2021-02-04), 10-K (filing date: 2020-02-06), 10-K (filing date: 2019-02-07), 10-K (filing date: 2018-02-08), 10-K (filing date: 2017-02-09).

2020 Calculations

1 Total asset turnover = Net sales ÷ Total assets
= 32,184 ÷ 47,344 = 0.68

2 Adjusted total asset turnover = Net sales ÷ Adjusted total assets
= 32,184 ÷ 33,542 = 0.96

Activity ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. 3M Co.’s adjusted total asset turnover ratio deteriorated from 2018 to 2019 and from 2019 to 2020.

Adjusted Financial Leverage

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
As Reported
Selected Financial Data (US$ in millions)
Total assets 47,344  44,659  36,500  37,987  32,906 
Total 3M Company shareholders’ equity 12,867  10,063  9,796  11,563  10,298 
Solvency Ratio
Financial leverage1 3.68 4.44 3.73 3.29 3.20
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Adjusted total assets 33,542  31,215  26,449  27,474  23,740 
Adjusted total 3M Company shareholders’ equity (935) (3,381) (255) 1,050  1,132 
Solvency Ratio
Adjusted financial leverage2 — — — 26.17 20.97

Based on: 10-K (filing date: 2021-02-04), 10-K (filing date: 2020-02-06), 10-K (filing date: 2019-02-07), 10-K (filing date: 2018-02-08), 10-K (filing date: 2017-02-09).

2020 Calculations

1 Financial leverage = Total assets ÷ Total 3M Company shareholders’ equity
= 47,344 ÷ 12,867 = 3.68

2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted total 3M Company shareholders’ equity
= 33,542 ÷ -935 = —

Adjusted Return on Equity (ROE)

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
As Reported
Selected Financial Data (US$ in millions)
Net income attributable to 3M 5,384  4,570  5,349  4,858  5,050 
Total 3M Company shareholders’ equity 12,867  10,063  9,796  11,563  10,298 
Profitability Ratio
ROE1 41.84% 45.41% 54.60% 42.01% 49.04%
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Net income attributable to 3M 5,384  4,570  5,349  4,858  5,050 
Adjusted total 3M Company shareholders’ equity (935) (3,381) (255) 1,050  1,132 
Profitability Ratio
Adjusted ROE2 — — — 462.67% 446.11%

Based on: 10-K (filing date: 2021-02-04), 10-K (filing date: 2020-02-06), 10-K (filing date: 2019-02-07), 10-K (filing date: 2018-02-08), 10-K (filing date: 2017-02-09).

2020 Calculations

1 ROE = 100 × Net income attributable to 3M ÷ Total 3M Company shareholders’ equity
= 100 × 5,384 ÷ 12,867 = 41.84%

2 Adjusted ROE = 100 × Net income attributable to 3M ÷ Adjusted total 3M Company shareholders’ equity
= 100 × 5,384 ÷ -935 = —

Adjusted Return on Assets (ROA)

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
As Reported
Selected Financial Data (US$ in millions)
Net income attributable to 3M 5,384  4,570  5,349  4,858  5,050 
Total assets 47,344  44,659  36,500  37,987  32,906 
Profitability Ratio
ROA1 11.37% 10.23% 14.65% 12.79% 15.35%
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Net income attributable to 3M 5,384  4,570  5,349  4,858  5,050 
Adjusted total assets 33,542  31,215  26,449  27,474  23,740 
Profitability Ratio
Adjusted ROA2 16.05% 14.64% 20.22% 17.68% 21.27%

Based on: 10-K (filing date: 2021-02-04), 10-K (filing date: 2020-02-06), 10-K (filing date: 2019-02-07), 10-K (filing date: 2018-02-08), 10-K (filing date: 2017-02-09).

2020 Calculations

1 ROA = 100 × Net income attributable to 3M ÷ Total assets
= 100 × 5,384 ÷ 47,344 = 11.37%

2 Adjusted ROA = 100 × Net income attributable to 3M ÷ Adjusted total assets
= 100 × 5,384 ÷ 33,542 = 16.05%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. 3M Co.’s adjusted ROA deteriorated from 2018 to 2019 but then slightly improved from 2019 to 2020.