General Mills Inc. - Understanding Financial Statements

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General Mills Inc. – Understanding Financial Statements

a.) General Mills makes money through producing various food products and distributing them all over the world.

b.) The financial statements that are commonly prepared for external reporting purposes are the Balance Sheet, Income Statement, and Statement of Cash Flows. General Mills gives these statements a title of Consolidated Statements of Earnings, Consolidated Balance Sheets and Consolidated statements of Cash Flows. Consolidated means that General Mills is factoring in all of its subsidiaries into its aggregated accounting figures that are represented on these statements.

c.) They are required by the SEC to do financial statements quarterly. These quarterly reports are called 10Q reports. They also are required by the SEC to do financial statements annually. These annual reports are called 10K reports.

d.) Management of General Mills is ultimately responsible for the company’s financial statements that are issued. Potential users of the General Mills financials would be investors, banks, competitors, and the government. Investors will use the financials to decide if the company is a viable investment option, banks for lending purposes to measure liquidity, competitors to see how they stack up, and the government may analyze them to make sure they are collecting a accurate amount of tax from the company.

e.) General Mills external auditors are KPMG LLP. The two “opinion” letters that General Mills received from KPMG is where KPMG will list any findings from the audit testing they ran. KPMG is ultimately responsible to test if the financial position of General Mills is materially stated correctly on their financials and that management maintained effective internal control over financial reporting. Both opinions are dated several months after General Mills year end because they are not written until completion of the audit which can’t be started until the completing of the fiscal year for the company.

f.)
General Mills Inc.|
Common Size Statement of Earnings|
| | | | | | | | | |
| | | | | 05/28/06| %|  | 5/28/2005| %|
Net Sales| | | | 11,640 | 100.00 | | 11,244 | 100.00 | Cost and Expenses:| | | | | | | |
| Cost of Sales| | | 6,966 | 0.60 | | 6,834 | 0.61 | | Selling (G&A)| | | 2,678| 0.23 | | 2,418 | 0.22 | | Interest, net| | | 399 | 0.03 | | 455| 0.04 | | Restructuring and other exit costs| 30| 0.00 | | 84 | 0.01 | | Divestitures (gain)| | | - | - | | (499)| (0.04)| | Debt repurchase costs| | - | - | | 137 | 0.01 | Total Costs and Expenses| | 10,073| 0.87 | | 9,429 | 0.84 | Earnings before Income Taxes | | 1,567| 0.13 | | 1,815 | 0.16 | Income Taxes| | | | 541 | 0.05 | | 664 | 0.06 | After-tax Earnings from Joint Ventures| 64| 0.01 | | 89| 0.01 | | Net Earnings| | | 1,090 | | | 1,240 | |

General Mills Inc.|
Common Size Balance Sheet|
| | | | | | | | | |
| | | | | 05/28/06| %|  | 5/28/2005| %|
ASSETS:| | | | | | | | |
| Cash| | | | 647 | 3.55%| | 573 | 3.17%| | Receivables| | | 1,076 | 5.91%| | 1,034 | 5.72%| | Inventories| | | 1,055 | 5.79%| | 1,037 | 5.74%| | Prepaid Expenses and other| | 216 | 1.19%| | 203 | 1.12%| | Deferred Income Taxes| |...
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