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3M Co. (MMM)

Profitability Analysis

Difficulty: Beginner

Profitability ratios measure the company’s ability to generate profitable sales from its resources (assets).

Ratios (Summary)
Gross Profit Margin
Operating Profit Margin
Net Profit Margin
Return on Equity (ROE)
Return on Assets (ROA)

Ratios (Summary)

3M Co., profitability ratios

		Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014
	Return on Sales
	Gross profit margin
	Operating profit margin
	Net profit margin
	Return on Investment
	Return on equity (ROE)
	Return on assets (ROA)

Based on: 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), 10-K (filing date: 2015-02-12).

Ratio	Description	The company
Gross profit margin	Gross profit margin indicates the percentage of revenue available to cover operating and other expenditures.	3M Co.’s gross profit margin deteriorated from 2016 to 2017 and from 2017 to 2018.
Operating profit margin	A profitability ratio calculated as operating income divided by revenue.	3M Co.’s operating profit margin improved from 2016 to 2017 but then deteriorated significantly from 2017 to 2018.
Net profit margin	An indicator of profitability, calculated as net income divided by revenue.	3M Co.’s net profit margin deteriorated from 2016 to 2017 but then improved from 2017 to 2018 not reaching 2016 level.

Ratio	Description	The company
ROE	A profitability ratio calculated as net income divided by shareholders’ equity.	3M Co.’s ROE deteriorated from 2016 to 2017 but then improved from 2017 to 2018 exceeding 2016 level.
ROA	A profitability ratio calculated as net income divided by total assets.	3M Co.’s ROA deteriorated from 2016 to 2017 but then improved from 2017 to 2018 not reaching 2016 level.

Gross Profit Margin

3M Co., gross profit margin calculation, comparison to benchmarks

		Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014
	Selected Financial Data (USD $ in millions)
	Gross profit
	Net sales
	Ratio
	Gross profit margin¹
	Benchmarks
	Gross Profit Margin, Competitors
	Danaher Corp.
	General Electric Co.
	Honeywell International Inc.

Based on: 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), 10-K (filing date: 2015-02-12).

2018 Calculations

¹ Gross profit margin = 100 × Gross profit ÷ Net sales
= 100 × hidden ÷ hidden = hidden

Ratio	Description	The company
Gross profit margin	Gross profit margin indicates the percentage of revenue available to cover operating and other expenditures.	3M Co.’s gross profit margin deteriorated from 2016 to 2017 and from 2017 to 2018.

Operating Profit Margin

3M Co., operating profit margin calculation, comparison to benchmarks

		Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014
	Selected Financial Data (USD $ in millions)
	Operating income
	Net sales
	Ratio
	Operating profit margin¹
	Benchmarks
	Operating Profit Margin, Competitors
	Danaher Corp.
	General Electric Co.
	Honeywell International Inc.
	Operating Profit Margin, Sector
	General Industrials
	Operating Profit Margin, Industry
	Industrials

Based on: 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), 10-K (filing date: 2015-02-12).

2018 Calculations

¹ Operating profit margin = 100 × Operating income ÷ Net sales
= 100 × hidden ÷ hidden = hidden

Ratio	Description	The company
Operating profit margin	A profitability ratio calculated as operating income divided by revenue.	3M Co.’s operating profit margin improved from 2016 to 2017 but then deteriorated significantly from 2017 to 2018.

Net Profit Margin

3M Co., net profit margin calculation, comparison to benchmarks

		Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014
	Selected Financial Data (USD $ in millions)
	Net income attributable to 3M
	Net sales
	Ratio
	Net profit margin¹
	Benchmarks
	Net Profit Margin, Competitors
	Danaher Corp.
	General Electric Co.
	Honeywell International Inc.
	Net Profit Margin, Sector
	General Industrials
	Net Profit Margin, Industry
	Industrials

Based on: 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), 10-K (filing date: 2015-02-12).

2018 Calculations

¹ Net profit margin = 100 × Net income attributable to 3M ÷ Net sales
= 100 × hidden ÷ hidden = hidden

Ratio	Description	The company
Net profit margin	An indicator of profitability, calculated as net income divided by revenue.	3M Co.’s net profit margin deteriorated from 2016 to 2017 but then improved from 2017 to 2018 not reaching 2016 level.

Return on Equity (ROE)

3M Co., ROE calculation, comparison to benchmarks

		Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014
	Selected Financial Data (USD $ in millions)
	Net income attributable to 3M
	Total 3M Company shareholders’ equity
	Ratio
	ROE¹
	Benchmarks
	ROE, Competitors
	Danaher Corp.
	General Electric Co.
	Honeywell International Inc.
	ROE, Sector
	General Industrials
	ROE, Industry
	Industrials

Based on: 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), 10-K (filing date: 2015-02-12).

2018 Calculations

¹ ROE = 100 × Net income attributable to 3M ÷ Total 3M Company shareholders’ equity
= 100 × hidden ÷ hidden = hidden

Ratio	Description	The company
ROE	A profitability ratio calculated as net income divided by shareholders’ equity.	3M Co.’s ROE deteriorated from 2016 to 2017 but then improved from 2017 to 2018 exceeding 2016 level.

Return on Assets (ROA)

3M Co., ROA calculation, comparison to benchmarks

		Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014
	Selected Financial Data (USD $ in millions)
	Net income attributable to 3M
	Total assets
	Ratio
	ROA¹
	Benchmarks
	ROA, Competitors
	Danaher Corp.
	General Electric Co.
	Honeywell International Inc.
	ROA, Sector
	General Industrials
	ROA, Industry
	Industrials

Based on: 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), 10-K (filing date: 2015-02-12).

2018 Calculations

¹ ROA = 100 × Net income attributable to 3M ÷ Total assets
= 100 × hidden ÷ hidden = hidden

Ratio	Description	The company
ROA	A profitability ratio calculated as net income divided by total assets.	3M Co.’s ROA deteriorated from 2016 to 2017 but then improved from 2017 to 2018 not reaching 2016 level.

	3M Co.	Other companies (not purchased previously)
Financial Statements
Common-Size Financial Statements
Ratios
Relative Valuation
Discounted Cash Flow (DCF) Valuation
Economic Value Added (EVA)
Long-term Trends
Analysis
Financial Reporting Quality

	All companies
Financial Statements
Common-Size Financial Statements
Ratios
Relative Valuation
Discounted Cash Flow (DCF) Valuation
Economic Value Added (EVA)
Long-term Trends
Analysis
Financial Reporting Quality