Kellogg Company is the world?s leading producer of ready-to-eat cereal products. In recent years, the company has taken numerous steps aimed at improving its profitability and earnings per share. Presented below are some basic facts for Kellogg.

Instructions

a. What are some of the reasons that management purchases its own stock?

b. Explain how earnings per share might be affected by treasury stock transactions.

c. Calculate the debt to assets ratio for the current year and the prior year, and discuss the implications of the change.

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(in millions) Net sales Net income Total assets Total liabilities Common stock, $0.25 par value Capital in excess of par value Retained earnings Treasury stock, at cost Number of shares outstanding (in millions) Current Year $14,792 1,807 Prior Year $14,580 632 15,153 12,302 15,474 11,867 105 105 678 6,689 3,470 358 626 6,749 2,999 363