Mmm Company Evaluation

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FIXED ASSET TURNOVER

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As a result of having higher fixed assed turnover ratios for the past three years, it can be stated that General electric does a better job using their fixed asset investments to generate revenues for their company.[2]

DEBT TO EQUITY

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The debt to equity ratio is the measure of a company's financial leverage. General Electric's high debt to equity ratio indicates that they have been aggressive in terms of generating revenue by utilizing debt. However, 3M Company has a significantly lower debt to equity ratio as they do not generate as much revenue by the use of debt.[3]

RETURN ON EQUITY

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This indicates the amount of revenues generated by the use of funds invested by shareholders.3M company has larger ROE numbers over the years. As a result of this, it can be stated that 3M generates more revenue from the use of funds invested by shareholders.

DUPONT ANALYSIS

The DuPont analysis used profit margin, total asset turnover, and equity multiplier in order to find ROE. Return on equity increased from .27 in 2012 to .38 in 2014. This occurred as a result of Profit Margin, total asset turnover, and equity multiplier increasing from 2012 to 2014. 3M Company’s DuPont analysis for 2014 was compared to one of their major competitors. It was found that General electric's ROE was significantly lower than 3M Company’s ROE. There was a difference of .26. This was a result of General Electric's profit margin, total asset turnover, and equity multiplier being lower than 3M Company's. This information can be viewed in the excel spreadsheet as well.

EXTERNAL FINANCING NEEDED

The excel spreadsheet attached to this project highlights the amount of external funds needed for this company. As a result of sales increasing by thirteen percent the amount of external funds needed will be 2,360,800. This was calculated in excel and all the numbers used are shown in excel.

INTERNAL GROWTH RATE AND SUSTAINABLE GROWTH RATE

The sustainable growth rate and the sustainable growth rate both increased from 2012 to 2014. The sustainable growth rate increased from .19 to 1.23. Also, the internal growth rate increased from .09 to .30. These increases were as a result of Return on equity increasing in the case of sustainable growth rate and return on assets increasing in relation to the internal growth rate.

COMPANY COMMON STOCK

Over the years, 3M Company stock price was constantly increasing. In 2012 there was a price of 91.41. In 2013 the price increased to 131.67. Following this, in 2014 the stock price again increased to 131.67. Presently the stock price is 156.79. As discussed earlier in this paper, 3M company's ratios were all increasing from 2012 to 2014. As a result of this it can be stated that 3M is experiencing steady growth. 3M Company has a beta of 1.19 and their biggest competitor general electric has a Beta of 1.36. This is a measure of systematic risk. Therefore, this highlights that 3M has lower risk than General electric.

Work Cited

"General Electric Co. (GE) | Long-term (Investment) Activity." Stock Analysis on Net. N.p., n.d. Web. 05 May 2015.

"Extreme Value Stocks - Diversified Machinery In-depth Research."Extreme Value Stocks - Diversified Machinery In-depth Research. N.p., n.d. Web. 05 May 2015.

"General Electric Debt to Equity Ratio (Quarterly):." General Electric Debt to Equity Ratio (Quarterly) (GE). N.p., n.d. Web. 05 May 2015.

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