What Are The Strengths And Weaknesses Of 3M

1201 Words5 Pages
Tree Key Financial Ratios of 3M company which show the evaluation of 3M’s performance and its strategies used over time are: Current Ratio, Profit Margin, and Return on Assets. Analysing 3M’s financial ratios will determine it strengths and weaknesses. These financial ratios are very important to investors and stockholders in making decisions for future investments. Also, this information will be used to analyze trends and to compare the firm’s financials to those of the other firms. Current Ratio is computed by dividing the Current Assets of a company by its Current Liabilities. The ratio is considered as a test of liquidity for a company. 3M Current Ratio for third quarter of 2016 is above 1.90 times, which is in good shape in comparison…show more content…
This is 434.01% lower than that of the Industrial Goods sector, and 423.47% lower than that of Diversified Machinery industry, The Profit Margin for all stocks is 410.02% lower than the firm” (MacroAxis). Comparing net profit margins among this group of companies we see 3M is not very effective at converting sales into profits. Return on Asset (ROA) presents how efficient the management of the company is in creating profit from using all of the assets disposing. It is a helpful ratio to assess the performance of each company’s department as well as to perceive management performance over time. 3M ROA for third quarter of 2016 has of 14.66% comparing with 15.11% for 2015, which decreased with 0.45%. However, 3M ROA of 14.66% get in Return On Asset Input Range of 11.52%-20.52% which shows that ROA is a pretty healthy number. Return on assets shows favorable impact because of net income increasing at a greater rate than assets. Analyzing Current Ratio, Profit Margin, and Return on Assets we can deduce that 3M company looks like it is not a very risky company, with not very high leveraged. We also see that 3M is a growing company and the numbers are looking right for success so long as there is no significant
Open Document