A second way we could do it is try to look the ratios up on the internet.

Why don't we do the second?

Before we jump on the internet to pull some ratios, a quick warning.

There's a lot of bad stuff on the internet.

Hopefully you aren't thinking that this course is one of those bad things.

But the problem with ratios provided on the internet is often times,

the provider does not give you the definitions.

You don't know how they're calculating the ratios.

So my advice is find one source that you trust, so they seem to use the same

ratios that you would get doing it by hand and then always use that source so

at least the ratios will always have consistent definitions.

So one of the best sources on the web that I found to get ratios is Morningstar.

Because they give you a long time series of ratios that you can use.

So if we look at 3M company's page,

there are some summary financial information, and then key ratios.

So we've got right here return on equity.

So that's our starting point in the DuPont formula.

You notice it's sort of been going down the last few years slightly.

We can look at the components.

Here's financial leverage going down, so they're becoming less levered over time.

Return on assets.

Up and then down again.

So a little bit more volatility with return on assets.

Then you can look at return on assets going into asset turnover and

what they call net margin percentage is what I called return on sales.

It's the profitability and you can see the profitability up and

then sort of down again which is tracking what we saw with our ROA.

And asset turnover has been up and down as well.

What we really need is to find three or four of 3M's closest competitors.

And then compare these ratios to the competitors to see whether

these trends are specific to 3M.

Or whether there's some kind of industry effect that's going on.

But based on my knowledge of the industry,

these are still pretty healthy ROE and ROA numbers.

And then above, we have the profit margin break down.

So we have gross margin which is really high, almost 50%.

SGN8 is sales which has been fairly flat.