1. The FY2016 income statement and balance sheet for General Mills, a competitor of P&G, follow. Use the income statement for GM to answer the required questions.

Use the following assumptions to forecast the GM income statement for FY2017.

Net sales will decrease by 1.5% (150 basis points) in FY 2017

Because of ongoing restructuring and efficiency improvement measures, operating expenses as a percentage of net sales will be lower than in FY2016 as follows:

o Cost of sales: 200 basis points lower.

o SGA expenses: 50 basis points lower.

No announced divestitures for FY2017.

Restructuring, impairment and other exit costs will be half the dollar amount reported in FY2016.

Tax expense as a percentage of pretax income will remain unchanged.

The following line items remain unchanged in dollar terms:

o Interest, net.

o After-tax earnings from joint ventures

o Net earnings attributable to redeemable and noncontrolling interests.

\begin{tabular}{|c|c|} \hline \begin{tabular}{l} GENERAL MILLS INC. \\ Consolidated Statements of Earnings \end{tabular} & \begin{tabular}{l} 12 Months Ended \\ May 29, 2016 \end{tabular} \\ \hline & \begin{tabular}{r} $16,563.1 \\ 10,733.6 \\ 3,118.9 \\ (148.2) \\ 151.4 \\ \end{tabular} \\ \hline & \begin{tabular}{r} 2,707.4 \\ 303.8 \\ \end{tabular} \\ \hline & \begin{tabular}{r} 2,403.6 \\ 755.2 \\ 88.4 \end{tabular} \\ \hline \begin{tabular}{l} Net earnings, including earnings attributable to redeemable and \\ noncontrolling interests \\ Net earnings attributable to redeemable and noncontrolling interests \end{tabular} & \begin{tabular}{r} 1,736.8 \\ 39.4 \\ \end{tabular} \\ \hline Net earnings attributable to General Mills . & $1,697.4 \\ \hline \end{tabular}