Accounting Case Study on General Mills
Financial Accounting Case Study Module 1: A. General Mills Consolidated Statements of Earnings: 1. The recorded sale amount of almost $8 billion is not the actual amount of cash collected. The amount of $8 billion includes cash and credit sales.
2. Sales increased each year from 2000 to 2002. The difference between the year 2000 and 2001 was a 5.35% increase (5,450-5,173/5,173 = .0535). The difference between the year 2001 and 2002 was a 45.85% increase (7,949-5,450/5,450 = .4585).
3. The largest expense for General Mills for the years 2000, 2001, and 2002 was the same; over 50% of the revenue each year went towards the cost of sales. Sales in 2002 were the largest, about 7% more than the two previous years.
2000: (2,698/5,173) = .522 = 52.2% 2001: (2,841/5,450 = .521 = 52.1% 2002: (4,767/7,949) = .599 = 59.9% 4. Net Income: 2000: $614 million 2001: $665 million 2002: $458 million When comparing the net income figures for the past three years, it is seen that between 2000 and 2001, the net income increased by $51 million, but between 2001 and 2002, the net income decreased by $207 million.
5. A company's stock price is usually influenced by the amount of net income because when finding the price of the stock, you must divide the number of stocks by the net income. So, the higher the net income, the lower the price of stocks, which is what buyers look for (means better profit).
6. Even though General Mills paid dividends in 2000, 2001 and 2002, the corresponding total dividend payments did not appear as an expense on the income statement because dividends are not an expense; they are a financing activity that is reported on the statement of stockholder's equity. They are payments that are made to only the owners of the company.
B. General Mills Consolidated Balance Sheets: 7. A company has assets so that they have a location and equipment to operate/create a business. Assets are resources that are controlled by a business. Without assets, one cannot produce and/or run a company. The purpose of assets are to keep track of expenses, what a company owns, like equipment, inventory, cash etc., and creates value for the company.
8. The total amount of assets at the end of 2002 was $16,540 million.
9. When comparing the assets from the beginning of 2002 to the end, we found that the percentage increase in assets was 224.
7. Sales had dropped in 1993 but operating profit margins increased due to increase in
...ense has decreased 82.8% from 2000 to 2004. All the above are contributing factors in Applebee’s achieving higher earnings, a 75% increase in net earnings from 2000 to 2004. Average shares has fall due to consistent share repurchasing programs by Applebee’s. Overall, the common-size analysis of the income statement are relatively consistent over the five years of study. Cost of goods has stayed consistent between 74%-75%, the Depreciation and amortization is between 9%-11%, income from Continue operations and Net Income are also both between 9%-10% in common-size analysis for income Statement. No unusual flutuations has been discovered.
The analytical formats used in response to question number 3 are threefold; 1) trend analysis, 2) common size analysis and 3) percentage change analysis. The rationale for this three-fold approach is that all other ratio analysis is derived from these three. The utilization of trend analysis aids in giving clues as to the financial status of the company is likely to improve or deteriorate. Likewise, the common size analysis relates to the fact that all income statement items are divided by
Sales growing at a faster rate than cost of goods sold. Projected FY4 and FY5 also had projected sales growing faster than cost of goods sold. See graph for details (Derived from Exhibit 1).
Total Asset Turnover – Dropped from .64 in 2001 to .58 in 2002 to .55 in 2003. The reason is big increase in Total Assets.
General Electric Company (GE) is a diversified technology, media and financial services company. With products and services ranging from aircrafts engines, power generation, water processing and security technology to medical imaging, business and consumer financing, media content and industrial products, it serves in more than 100 countries. This analysis will use financial ratios to see just how GE is performing as a Fortune 500 company.
General Mills – A fortune 500 company, food products is its primary business. “The world’s sixth largest food company (General Mills, 2010).” General Mills markets many popular cereal products including Cheerios’ and Lucky Charms both of which are very competitive with our current product line. They have a global presence with revenues of USD 14,796.5 million and will remain one of our top
Sun Microsystems saw tremendous growth in net income between 1999 and 2000 leading up to a sharp decline between 2000 and 2001. The income statements show increased revenues in 2001, contradicting the data above. Further analysis provides an explanation for the deceleration of income growth in spite of increased revenue. The ratios of several expenses to net revenues were taken for 2000 and 2001.
General Motor's reported an operating loss of $35 billion in it's 2009 first quarter statement, but the company earned $4.7 billion in 2010.
Sales growth after 2000 were only 9%, which the average annual sale growth rates range from 10% to 30% in their industry. The lack of cash is explained by the current liquidity ratio
Their % change in A/R/Overall % change is sales ratio shows a sharp decrease starting in 2005 till 2009 where it reached a low of -19.25%. This could be attributable to the recession in which the company could have been experiencing a lower amount of accounts receivable to sales during that time frame.
Ratio Analysis. ConAgra had strong sales and revenue trends in 2013 to 2014. The company had significant growth in 2013 sales and revenue increased to $15.5 billion a 16.84% increase. The growth continued in 2014 with sales and revenue increasing 2.2% to $15.8 billion.
Charles Chocolate’s sales revenue decreased -1.176% between the years 2010 and 2011. The equation that as used to get that was Revenue Growth= 100 × (Current Value-Prior Value/Prior Value) 100 × (11,850,480-11,991,558/11,991,558). The change in the sales revenue could have happened for very many reasons. Being a premium chocolate making company, their product may not have been very high in demand. Also forecasting the demand for their product was not a very easy thing to do either. Another issue that Charles Chocolate’s faced their competitors, such as Godiva and Lindt, are more of a well known brand then they are.
When analyzing Coca-Cola’s statement of cash flow, the first thing to note is a steady increase in operating activities within the past few years. These transactions affect the net income. From 2001 to 2003 the cash from net income increased from $4.1 million to $5.5 million. The operating activities is often the most important cash flow of a business because it shows the cash from revenue compared to the payments made for expenses (2).
The gross profit margin is at 27% which is a percent higher than industry standards. The company is performing good and meeting industry standards in terms of cost of goods sold and sales volume. The net income margin decreased to 0.7% in 2003 a decrease of 0.3% compared to 2002.