EYK14-5. Accounting Research Problem: General Mills, Inc. The fiscal year 2017 annual report of Gen- eral Mills, Inc. is available on this book's web site. Required a. Calculate (or identify the following financial ratios for 2016 and 2017: 1. Gross profit percentage 2. Return on sales 3. Asset turnover (2015, total assets = $21,832.0 million) 4. Return on assets (2015, total assets = $21.832.0 million) 5. Return on common stockholders' equity (2015, total stockholders' equity = $4,996.7 million) 6. Current ratio 7. Quick ratio 8. Operating-cash-flow-to-current-liabilities ratio (2015, current liabilities = $4,890.1 million) 9. Accounts receivable turnover (2015, accounts receivable = $1,386.7 million) 10. Average collection period 11. Inventory turnover (2015, inventory = $1,540.9 million) 12. Days' sales in inventory 13. Debt-to-equity ratio 14. Times-interest-earned ratio 15. Operating-cash-flow-to-capital-expenditures ratio 16. Earnings per share 17. Price-earnings ratio (Use year-end adjusted closing stock price of $57.32 for 2017 and $63.69 for 2016.) 18. Dividend yield 19. Dividend payout ratio b. Comment briefly on the changes from fiscal 2016 to fiscal 2017 in the ratios computed above. 2017 2016 Fiscal Year 2015 (a) 2014 2013 $ 15,619.8 5,563.8 2,801.3 2,566.4 2,952.6 $ 16,563.1 5,829.5 3,118.9 2,707.4 2,999.5 (148.2) 1,697.4 754.4 222.1 $ 17,630.3 5,949.2 3,328.0 2,077.3 3,035.0 $ 17,909.6 6,369.8 3,474.3 2,957.4 3,153.9 (65.5) 1,824.4 869.5 243.6 $ 17,774.1 6,423.9 3,552.3 2,851.8 3,222.9 13.5 1,657.5 623.8 218.2 1,221.3 823.1 229.4 1,855.2 895.0 237.9 598.0 611.9 618.8 645.7 665.6 2.77 3.08 $ $ 2.77 2.92 $ $ 1.97 2.86 $ $ 2.83 2.82 $ $ 2.79 2.72 $ 35.6% 35.2% 33.7% 35.6% 36.1% 17.9% 16.4% 18.8% 16.3% 18.9% 11.8% 19.4% 16.5% 20.0% 16.0% In Millions, Except Per Share Data, Percentages and Ratios Operating data: Net sales Gross margin Selling, general, and administrative expenses Operating profit Total segment operating profit Divestitures loss (gain) Net earnings attributable to General Mills Advertising and media expense Research and development expense Average shares outstanding: Diluted Earnings per share Diluted Diluted, excluding certain items affecting comparability Operating ratios: Gross margin as a percentage of net sales Selling general, and administrative expenses as a percentage of net sales Operating profit as a percentage of net sales Adjusted operating profit as a percentage of net sales bilo Total segment operating profit as a percentage of net sales Effective income tax rate Return on average total capital Adjusted return on average total capital (c) Balance sheet data: Land, buildings, and equipment Total assets Long-term debt, excluding current portion Total debt Cash flow data: Net cash provided by operating activities Capital expenditures Free cash flow bilo Fixed charge coverage ratio Operating cash flow to debt ratio Share data: Low stock price High stock price Closing stock price Cash dividends per common share Number of full- and part-time employees 18.1% 16.8% 15.9% 16.2% 16.3% 17.6% 18.9% 28.8% 12.7% 11.6% 18.1% 31.4% 12.9% 11.3% 17.2% 33.3% 9.1% 11.2% 33.39 18.1% 29.2% 13.4% 12.0% 12.5% 11.6% $ $ $ $ 3,687.7 21,812.6 7,642.9 9,481.7 $ 3.743.6 21,712.3 7,057.7 8,430.9 3,783.3 21,832.0 7,575.3 9,191.5 3,941.9 23,044.7 6,396.6 8,758.9 3,878.1 22,505.7 5,901.8 7,944.8 $ $ $ $ $ 2,313.3 684.4 1,628.9 7.26 24.4% 2,629.8 729.3 1,900.5 7.40 31.2% 2,542.8 712.4 1,830.4 5.54 27.7% 2,541.0 663.5 1,877.5 8.04 29.0% 2,926.0 613.9 2,312.1 7.62 36.8% $ $ $ $ 55.91 72.64 57.32 1.92 38,000 54.12 65.36 62.87 1.78 39,000 48.86 57.14 56.15 1.67 42,000 46.86 54.40 53.81 1.55 43,000 37.55 50.93 48.98 1.32 41,000 GENERAL MILLS, INC. AND SUBSIDIARIES May 28, 2017 May 29, 2016 In Millions, Except Par Value ASSETS Current assets: Cash and cash equivalents Receivables Inventories Prepaid expenses and other current assets Total current assets Land, buildings, and equipment Goodwill Other intangible assets Other assets Total assets $ 766.1 1,430.1 1,483.6 381.6 4,061.4 3,687.7 8,747.2 4,530.4 785.9 $ 21,812.6 $ 763.7 1,360.8 1,413.7 399.0 3,937.2 3,743.6 8,741.2 4,538.6 751.7 $ 21,712.3 $ $ LIABILITIES AND EQUITY Current liabilities: Accounts payable Current portion of long-term debt Notes payable Other current liabilities Total current liabilities Long-term debt Deferred income taxes Other liabilities Total liabilities Redeemable interest Stockholders' equity: Common stock, 754.6 shares issued, $0.10 par value Additional paid-in capital Retained earnings Common stock in treasury, at cost, shares of 177.7 and 157.8 Accumulated other comprehensive loss Total stockholders' equity Noncontrolling interests Total equity Total liabilities and equity See accompanying notes to consolidated financial statements. 2,119.8 604.7 1,234.1 1,372.2 5,330.8 7,642.9 1,719.4 1,523.1 16,216.2 910.9 2,046.5 1,103.4 269.8 1,595.0 5,014.7 7,057.7 1,399.6 2,087.6 15,559.6 845.6 75.5 1,120.9 13,138.9 (7.762.9) (2,244.5) 4,327.9 357.6 4,685.5 $ 21,812.6 75.5 1,177.0 12,616.5 (6,326.6) (2,612.2) 4,930.2 376.9 5,307.1 $ 21,712.3 2017 2016 2015 $ 1,701.1 $ 1,736.8 $ 1,259.4 603.6 (85.0) 75.6 95.7 183.9 (64.1) (45.4) 35.7 13.5 117.0 (232.0) (86.3) 2,313.3 608.1 (88.4) 75.1 89.8 120.6 (94.1) (47.8) 118.1 (148.2) 107.2 258.2 (105.6) 2,629.8 588.3 (84.3) 72.6 106.4 25.3 (74.6) (49.5) 91.3 531.1 214.7 (137.9) 2,542.8 (684.4) (729.3) (84.0) 63.9 (712.4) (822.3) (102.4) 11.0 3.3 42 In Millions Cash Flows - Operating Activities Net eamings, including earnings attributable to redeemable and noncontrolling interests Adjustments to reconcile net earings to net cash provided by operating activities: Depreciation and amortization After-tax earnings from joint ventures Distributions of earnings from joint ventures Stock-based compensation Deferred income taxes Tax benefit on exercised options Pension and other postretirement benefit plan contributions Pension and other postretirement benefit plan costs Divestitures loss (gain) Restructuring, impairment, and other exit costs Changes in current assets and liabilities, excluding the effects of acquisitions and divestitures Other, net Net cash provided by operating activities Cash Flows - Investing Activities Purchases of land, buildings, and equipment Acquisitions, net of cash acquired Investments in affiliates, net Proceeds from disposal of land, buildings, and equipment Proceeds from divestitures Exchangeable note Other, net Net cash provided (used) by investing activities Cash Flows - Financing Activities Change in notes payable Issuance of long-term debt Payment of long-term debt Proceeds from common stock issued on exercised options Tax benefit on exercised options Purchases of common stock for treasury Dividends paid Distributions to noncontrolling and redeemable interest holders Other, net Net cash used by financing activities Effect of exchange rate changes on cash and cash equivalents Increase (decrease) in cash and cash equivalents Cash and cash equivalents - beginning of year Cash and cash equivalents - end of year Cash Flow from Changes in Current Assets and Liabilities, excluding the effects of acquisitions and divestitures: Receivables Inventories Prepaid expenses and other current assets Accounts payable Other current liabilities Changes in current assets and liabilities See accompanying notes to consolidated financial statements. 17.5 13.0 (0.5) (646.9) 828.5 21.1 (112) 93.4 27.9 (4.0) (1,602.2) 962.4 1,072.1 (1,000.0) 112.6 64.1 (1,651.5) (1.135.1) (61.0) (9.1) (1,645.5) (18.5) 2.4 763.7 766.1 (323.8) 542.5 (1,000.4) 171.9 94.1 (606.7) (1,071.7) (84.3) (7.2) (2.285.6) (8.1) 429.5 334.2 763.7 (509.8) 2.253.2 (1.145.8) 163.7 74.6 (1,161.9) (1,017.7) (25.0) (16.1) (1.384.8) (88.9) (533.1) 867.3 $ 334.2 $ $ $ $ $ (69.2) (61.5) 16.6 99.5 (217.4) (232.0) (6.9) (146.1) (0.1) 318.7 92.6 258.2 6.8 (24.2) (50.5) 145.8 136.8 214.7 $ $ $ EYK14-5. Accounting Research Problem: General Mills, Inc. The fiscal year 2017 annual report of Gen- eral Mills, Inc. is available on this book's web site. Required a. Calculate (or identify the following financial ratios for 2016 and 2017: 1. Gross profit percentage 2. Return on sales 3. Asset turnover (2015, total assets = $21,832.0 million) 4. Return on assets (2015, total assets = $21.832.0 million) 5. Return on common stockholders' equity (2015, total stockholders' equity = $4,996.7 million) 6. Current ratio 7. Quick ratio 8. Operating-cash-flow-to-current-liabilities ratio (2015, current liabilities = $4,890.1 million) 9. Accounts receivable turnover (2015, accounts receivable = $1,386.7 million) 10. Average collection period 11. Inventory turnover (2015, inventory = $1,540.9 million) 12. Days' sales in inventory 13. Debt-to-equity ratio 14. Times-interest-earned ratio 15. Operating-cash-flow-to-capital-expenditures ratio 16. Earnings per share 17. Price-earnings ratio (Use year-end adjusted closing stock price of $57.32 for 2017 and $63.69 for 2016.) 18. Dividend yield 19. Dividend payout ratio b. Comment briefly on the changes from fiscal 2016 to fiscal 2017 in the ratios computed above. 2017 2016 Fiscal Year 2015 (a) 2014 2013 $ 15,619.8 5,563.8 2,801.3 2,566.4 2,952.6 $ 16,563.1 5,829.5 3,118.9 2,707.4 2,999.5 (148.2) 1,697.4 754.4 222.1 $ 17,630.3 5,949.2 3,328.0 2,077.3 3,035.0 $ 17,909.6 6,369.8 3,474.3 2,957.4 3,153.9 (65.5) 1,824.4 869.5 243.6 $ 17,774.1 6,423.9 3,552.3 2,851.8 3,222.9 13.5 1,657.5 623.8 218.2 1,221.3 823.1 229.4 1,855.2 895.0 237.9 598.0 611.9 618.8 645.7 665.6 2.77 3.08 $ $ 2.77 2.92 $ $ 1.97 2.86 $ $ 2.83 2.82 $ $ 2.79 2.72 $ 35.6% 35.2% 33.7% 35.6% 36.1% 17.9% 16.4% 18.8% 16.3% 18.9% 11.8% 19.4% 16.5% 20.0% 16.0% In Millions, Except Per Share Data, Percentages and Ratios Operating data: Net sales Gross margin Selling, general, and administrative expenses Operating profit Total segment operating profit Divestitures loss (gain) Net earnings attributable to General Mills Advertising and media expense Research and development expense Average shares outstanding: Diluted Earnings per share Diluted Diluted, excluding certain items affecting comparability Operating ratios: Gross margin as a percentage of net sales Selling general, and administrative expenses as a percentage of net sales Operating profit as a percentage of net sales Adjusted operating profit as a percentage of net sales bilo Total segment operating profit as a percentage of net sales Effective income tax rate Return on average total capital Adjusted return on average total capital (c) Balance sheet data: Land, buildings, and equipment Total assets Long-term debt, excluding current portion Total debt Cash flow data: Net cash provided by operating activities Capital expenditures Free cash flow bilo Fixed charge coverage ratio Operating cash flow to debt ratio Share data: Low stock price High stock price Closing stock price Cash dividends per common share Number of full- and part-time employees 18.1% 16.8% 15.9% 16.2% 16.3% 17.6% 18.9% 28.8% 12.7% 11.6% 18.1% 31.4% 12.9% 11.3% 17.2% 33.3% 9.1% 11.2% 33.39 18.1% 29.2% 13.4% 12.0% 12.5% 11.6% $ $ $ $ 3,687.7 21,812.6 7,642.9 9,481.7 $ 3.743.6 21,712.3 7,057.7 8,430.9 3,783.3 21,832.0 7,575.3 9,191.5 3,941.9 23,044.7 6,396.6 8,758.9 3,878.1 22,505.7 5,901.8 7,944.8 $ $ $ $ $ 2,313.3 684.4 1,628.9 7.26 24.4% 2,629.8 729.3 1,900.5 7.40 31.2% 2,542.8 712.4 1,830.4 5.54 27.7% 2,541.0 663.5 1,877.5 8.04 29.0% 2,926.0 613.9 2,312.1 7.62 36.8% $ $ $ $ 55.91 72.64 57.32 1.92 38,000 54.12 65.36 62.87 1.78 39,000 48.86 57.14 56.15 1.67 42,000 46.86 54.40 53.81 1.55 43,000 37.55 50.93 48.98 1.32 41,000 GENERAL MILLS, INC. AND SUBSIDIARIES May 28, 2017 May 29, 2016 In Millions, Except Par Value ASSETS Current assets: Cash and cash equivalents Receivables Inventories Prepaid expenses and other current assets Total current assets Land, buildings, and equipment Goodwill Other intangible assets Other assets Total assets $ 766.1 1,430.1 1,483.6 381.6 4,061.4 3,687.7 8,747.2 4,530.4 785.9 $ 21,812.6 $ 763.7 1,360.8 1,413.7 399.0 3,937.2 3,743.6 8,741.2 4,538.6 751.7 $ 21,712.3 $ $ LIABILITIES AND EQUITY Current liabilities: Accounts payable Current portion of long-term debt Notes payable Other current liabilities Total current liabilities Long-term debt Deferred income taxes Other liabilities Total liabilities Redeemable interest Stockholders' equity: Common stock, 754.6 shares issued, $0.10 par value Additional paid-in capital Retained earnings Common stock in treasury, at cost, shares of 177.7 and 157.8 Accumulated other comprehensive loss Total stockholders' equity Noncontrolling interests Total equity Total liabilities and equity See accompanying notes to consolidated financial statements. 2,119.8 604.7 1,234.1 1,372.2 5,330.8 7,642.9 1,719.4 1,523.1 16,216.2 910.9 2,046.5 1,103.4 269.8 1,595.0 5,014.7 7,057.7 1,399.6 2,087.6 15,559.6 845.6 75.5 1,120.9 13,138.9 (7.762.9) (2,244.5) 4,327.9 357.6 4,685.5 $ 21,812.6 75.5 1,177.0 12,616.5 (6,326.6) (2,612.2) 4,930.2 376.9 5,307.1 $ 21,712.3 2017 2016 2015 $ 1,701.1 $ 1,736.8 $ 1,259.4 603.6 (85.0) 75.6 95.7 183.9 (64.1) (45.4) 35.7 13.5 117.0 (232.0) (86.3) 2,313.3 608.1 (88.4) 75.1 89.8 120.6 (94.1) (47.8) 118.1 (148.2) 107.2 258.2 (105.6) 2,629.8 588.3 (84.3) 72.6 106.4 25.3 (74.6) (49.5) 91.3 531.1 214.7 (137.9) 2,542.8 (684.4) (729.3) (84.0) 63.9 (712.4) (822.3) (102.4) 11.0 3.3 42 In Millions Cash Flows - Operating Activities Net eamings, including earnings attributable to redeemable and noncontrolling interests Adjustments to reconcile net earings to net cash provided by operating activities: Depreciation and amortization After-tax earnings from joint ventures Distributions of earnings from joint ventures Stock-based compensation Deferred income taxes Tax benefit on exercised options Pension and other postretirement benefit plan contributions Pension and other postretirement benefit plan costs Divestitures loss (gain) Restructuring, impairment, and other exit costs Changes in current assets and liabilities, excluding the effects of acquisitions and divestitures Other, net Net cash provided by operating activities Cash Flows - Investing Activities Purchases of land, buildings, and equipment Acquisitions, net of cash acquired Investments in affiliates, net Proceeds from disposal of land, buildings, and equipment Proceeds from divestitures Exchangeable note Other, net Net cash provided (used) by investing activities Cash Flows - Financing Activities Change in notes payable Issuance of long-term debt Payment of long-term debt Proceeds from common stock issued on exercised options Tax benefit on exercised options Purchases of common stock for treasury Dividends paid Distributions to noncontrolling and redeemable interest holders Other, net Net cash used by financing activities Effect of exchange rate changes on cash and cash equivalents Increase (decrease) in cash and cash equivalents Cash and cash equivalents - beginning of year Cash and cash equivalents - end of year Cash Flow from Changes in Current Assets and Liabilities, excluding the effects of acquisitions and divestitures: Receivables Inventories Prepaid expenses and other current assets Accounts payable Other current liabilities Changes in current assets and liabilities See accompanying notes to consolidated financial statements. 17.5 13.0 (0.5) (646.9) 828.5 21.1 (112) 93.4 27.9 (4.0) (1,602.2) 962.4 1,072.1 (1,000.0) 112.6 64.1 (1,651.5) (1.135.1) (61.0) (9.1) (1,645.5) (18.5) 2.4 763.7 766.1 (323.8) 542.5 (1,000.4) 171.9 94.1 (606.7) (1,071.7) (84.3) (7.2) (2.285.6) (8.1) 429.5 334.2 763.7 (509.8) 2.253.2 (1.145.8) 163.7 74.6 (1,161.9) (1,017.7) (25.0) (16.1) (1.384.8) (88.9) (533.1) 867.3 $ 334.2 $ $ $ $ $ (69.2) (61.5) 16.6 99.5 (217.4) (232.0) (6.9) (146.1) (0.1) 318.7 92.6 258.2 6.8 (24.2) (50.5) 145.8 136.8 214.7 $ $ $
