Answer:
General Mills, Inc.
A1: General Mills, Inc.
Income Statement ($ millions)
For Year Ended May 29, 2016
Revenue $16,563.1
Cost of goods sold 10,733.6
Gross profit 5,829.5
Total Expenses 4,092.7
Net income $1,736.8
A2: General Mills, Inc.
Balance Sheet ($ millions)
May 29, 2016
Cash $763.7
Non-cash assets 20,948.6
Total Assets $21,712.3
Total liabilities 16,405.2
Stockholders' equity 5,307.1
Total liabilities & equity $21,712.3
A3: General Mills, Inc.
Statement of Cash Flows ($ millions)
For Year Ended May 29, 2016
Cash from operating activities $2,629.8
Cash from investing activities 93.4
Cash from financing activities (2,293.7)
Net change in cash $429.5
Cash, beginning year 334.2
Cash, ending year 763.7 $429.5
B. Negative amount for cash from financing activities:
4) A negative amount for cash from financing activities reflects the reduction of long-term debt, which is a positive sign of the company’s ability to retire debt obligations.
C) Using the statements prepared for part a. compute the following ratios (for this part only, use the year-end balance instead of the average for assets and stockholders' equity):
i) Profit margin
= Net Income/Revenue * 100
= $1,736.8/$16,563.1 * 100
= 10.48%
ii) Asset turnover
= Revenue/Average Assets
= $16,563.1/$21,712.3
= 0.76
iii) Return on assets
= Net Income/Assets * 100
= $1,736.8/$21,712.3 * 100
= 8%
iv) Return on equity
= Net Income/Equity * 100
= $1,736.8/$5,307.1 * 100
= 32.73%
Explanation:
i) Profit margin is a financial performance measure that shows the amount of revenue that is not spent as cost of goods sold and expenses.
ii) Asset turnover is a financial performance measure that shows how assets have been utilized to generate sales.
iii) Return on assets is also a financial performance measure that shows the percentage of profits that have been made from the use of the assets for the period.
iv) Return on equity is also a financial performance measure that the percentage of profits when compared with the equity of stockholders.
