Stock Analysis on Net
Stock Analysis on Net
Microsoft Excel LibreOffice Calc

3M Co. (NYSE:MMM)

Analysis of Goodwill and Intangible Assets

Advanced level

Goodwill and Intangible Asset Disclosure

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

US$ in millions

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Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Customer related intangible assets 4,316  2,291  2,332  1,939  1,973 
Patents 538  542  561  602  616 
Other technology-based intangible assets 2,124  576  583  524  525 
Definite-lived tradenames 1,158  664  678  420  421 
Other amortizable intangible assets 125  125  207  211  216 
Finite-lived intangible assets, gross carrying amount 8,261  4,198  4,361  3,696  3,751 
Accumulated amortization (2,520) (2,182) (2,073) (2,005) (1,785)
Finite-lived intangible assets, net 5,741  2,016  2,288  1,691  1,966 
Non-amortizable intangible assets (primarily tradenames) 638  641  648  629  635 
Acquired intangible assets 6,379  2,657  2,936  2,320  2,601 
Goodwill 13,444  10,051  10,513  9,166  9,249 
Goodwill and intangible assets 19,823  12,708  13,449  11,486  11,850 

Based on: 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), 10-K (filing date: 2016-02-11).

Item Description The company
Acquired intangible assets 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 acquired intangible assets decreased from 2017 to 2018 but then increased from 2018 to 2019 exceeding 2017 level.
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 decreased from 2017 to 2018 but then increased from 2018 to 2019 exceeding 2017 level.
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 decreased from 2017 to 2018 but then increased from 2018 to 2019 exceeding 2017 level.

Adjustments to Financial Statements: Removal of Goodwill

3M Co., adjustments to financial statements

US$ in millions

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Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Adjustment to Total Assets
Total assets (as reported) 44,659  36,500  37,987  32,906  32,718 
Less: Goodwill 13,444  10,051  10,513  9,166  9,249 
Total assets (adjusted) 31,215  26,449  27,474  23,740  23,469 
Adjustment to Total 3M Company Shareholders’ Equity
Total 3M Company shareholders’ equity (as reported) 10,063  9,796  11,563  10,298  11,708 
Less: Goodwill 13,444  10,051  10,513  9,166  9,249 
Total 3M Company shareholders’ equity (adjusted) (3,381) (255) 1,050  1,132  2,459 

Based on: 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), 10-K (filing date: 2016-02-11).

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, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Total Asset Turnover
Reported total asset turnover 0.72 0.90 0.83 0.92 0.93
Adjusted total asset turnover 1.03 1.24 1.15 1.27 1.29
Financial Leverage
Reported financial leverage 4.44 3.73 3.29 3.20 2.79
Adjusted financial leverage — — 26.17 20.97 9.54
Return on Equity (ROE)
Reported ROE 45.41% 54.60% 42.01% 49.04% 41.28%
Adjusted ROE — — 462.67% 446.11% 196.54%
Return on Assets (ROA)
Reported ROA 10.23% 14.65% 12.79% 15.35% 14.77%
Adjusted ROA 14.64% 20.22% 17.68% 21.27% 20.59%

Based on: 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), 10-K (filing date: 2016-02-11).

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 improved from 2017 to 2018 but then deteriorated significantly from 2018 to 2019.
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. 3M Co.’s adjusted ROA improved from 2017 to 2018 but then deteriorated significantly from 2018 to 2019.

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

Adjusted Total Asset Turnover

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Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Net sales 32,136  32,765  31,657  30,109  30,274 
Total assets 44,659  36,500  37,987  32,906  32,718 
Activity Ratio
Total asset turnover1 0.72 0.90 0.83 0.92 0.93
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Net sales 32,136  32,765  31,657  30,109  30,274 
Adjusted total assets 31,215  26,449  27,474  23,740  23,469 
Activity Ratio
Adjusted total asset turnover2 1.03 1.24 1.15 1.27 1.29

Based on: 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), 10-K (filing date: 2016-02-11).

2019 Calculations

1 Total asset turnover = Net sales ÷ Total assets
= 32,136 ÷ 44,659 = 0.72

2 Adjusted total asset turnover = Net sales ÷ Adjusted total assets
= 32,136 ÷ 31,215 = 1.03

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 improved from 2017 to 2018 but then deteriorated significantly from 2018 to 2019.

Adjusted Financial Leverage

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Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Total assets 44,659  36,500  37,987  32,906  32,718 
Total 3M Company shareholders’ equity 10,063  9,796  11,563  10,298  11,708 
Solvency Ratio
Financial leverage1 4.44 3.73 3.29 3.20 2.79
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Adjusted total assets 31,215  26,449  27,474  23,740  23,469 
Adjusted total 3M Company shareholders’ equity (3,381) (255) 1,050  1,132  2,459 
Solvency Ratio
Adjusted financial leverage2 — — 26.17 20.97 9.54

Based on: 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), 10-K (filing date: 2016-02-11).

2019 Calculations

1 Financial leverage = Total assets ÷ Total 3M Company shareholders’ equity
= 44,659 ÷ 10,063 = 4.44

2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted total 3M Company shareholders’ equity
= 31,215 ÷ -3,381 = —

Adjusted Return on Equity (ROE)

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Net income attributable to 3M 4,570  5,349  4,858  5,050  4,833 
Total 3M Company shareholders’ equity 10,063  9,796  11,563  10,298  11,708 
Profitability Ratio
ROE1 45.41% 54.60% 42.01% 49.04% 41.28%
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Net income attributable to 3M 4,570  5,349  4,858  5,050  4,833 
Adjusted total 3M Company shareholders’ equity (3,381) (255) 1,050  1,132  2,459 
Profitability Ratio
Adjusted ROE2 — — 462.67% 446.11% 196.54%

Based on: 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), 10-K (filing date: 2016-02-11).

2019 Calculations

1 ROE = 100 × Net income attributable to 3M ÷ Total 3M Company shareholders’ equity
= 100 × 4,570 ÷ 10,063 = 45.41%

2 Adjusted ROE = 100 × Net income attributable to 3M ÷ Adjusted total 3M Company shareholders’ equity
= 100 × 4,570 ÷ -3,381 = —

Adjusted Return on Assets (ROA)

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Net income attributable to 3M 4,570  5,349  4,858  5,050  4,833 
Total assets 44,659  36,500  37,987  32,906  32,718 
Profitability Ratio
ROA1 10.23% 14.65% 12.79% 15.35% 14.77%
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Net income attributable to 3M 4,570  5,349  4,858  5,050  4,833 
Adjusted total assets 31,215  26,449  27,474  23,740  23,469 
Profitability Ratio
Adjusted ROA2 14.64% 20.22% 17.68% 21.27% 20.59%

Based on: 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), 10-K (filing date: 2016-02-11).

2019 Calculations

1 ROA = 100 × Net income attributable to 3M ÷ Total assets
= 100 × 4,570 ÷ 44,659 = 10.23%

2 Adjusted ROA = 100 × Net income attributable to 3M ÷ Adjusted total assets
= 100 × 4,570 ÷ 31,215 = 14.64%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. 3M Co.’s adjusted ROA improved from 2017 to 2018 but then deteriorated significantly from 2018 to 2019.