Make sure you answer every question and show your calculations for your report to qualify for full credit. 1. Describe the recent profitability of CPB referring in particular to the margin ratios and rates of return on assets, equity, and invested capital. Do the profitability ratios provided indicate any possible reason for the described trend? 2. Decompose the return on assets and return on equity using the short and long versions of the DuPont Equation (ROA = Net Margin X Asset Turnover; ROE = Net Margin X Asset Turnover X Equity Multiplier). Which of the components in each version explain the observed trend in the ROA and ROE in the last five years? Please note that the Financial Leverage Ratio is also known as the Equity Multiplier. 3. Describe the liquidity and financial health of the company referring specifically to the liquidity and debt rations provided. Do the trends indicate any reason for concern? Be specific. 4. Calculate the cost of long term debt for CPB by estimating the weighted average of the outstanding long term bonds yields to maturity. Use all yields provided and calculate weights either based on the percent each bonds face value represents from its total face value or on the percentage each bonds market value represents from its total market value. 5. Calculate the cost of equity for CPB by means of the constant growth model. Assume CPB is expected to decline in growth by 1.35% on the average per year. Calculate the average cost of capital by weighing your estimated cost of debt and the cost of equity by the the percentage of debt and equity in the capital structure provided in the data.

Profitability and Financial Position for Campbell Soup Co (CPB) 2018-07 2017-07 2016-07 2015-07 2014-07 Equity and Debt Revenue USD Mil 8,685 7,890 7,961 8,082 8,268 Equity 1,364.00 Operating Income USD Mil 1,122 1,630 1,105 1,203 1,253 Debt 9,893.00 Operating Margin 12.9% 20.7% 13.9% 14.9% 15.2% Net Income USD Mil 261 887 563 691 818 Long Term Debt Shares Mil 302 307 311 313 316 Coupon % Maturity Price $ Yield % Face Value $ (Price/100) x Face Value Earnings Per Share USD 0.86 2.89 1.81 2.21 2.59 Variable 3/16/2020 99.536 2.834 500,000,000 497680000 Dividends Per Share USD 1.4 1.4 1.24 1.24 1.24 Variable 3/15/2021 98.835 2.964 400,000,000 395340000 Operating Cash Flow USD Mil 1,305 1,291 1,463 1,182 899 3.3 3/15/2021 98.963 3.773 650,000,000 643259500 Cap Spending USD Mil -407 -338 -341 -380 -347 4.25 4/15/2021 100.885 3.857 500,000,000 504425000 Free Cash Flow USD Mil 898 953 1,122 802 552 8.875 5/1/2021 111.812 3.775 200,000,000 223624000 2.5 8/2/2022 95.353 3.865 450,000,000 429088500 Key Ratios -> Profitability 2018-07 2017-07 2016-07 2015-07 2014-07 3.65 3/15/2023 96.481 4.559 1,200,000,000 1157772000 COGS % of Sales 67.58 61.23 65.08 65.29 64.95 3.95 3/15/2025 94.83 4.913 850,000,000 806055000 Gross Margin % of Sales 32.42 38.77 34.92 34.71 35.05 3.3 3/19/2025 90.885 4.998 300,000,000 272655000 Operating Margin 12.9% 20.7% 13.9% 14.9% 15.2% 4.15 3/15/2028 92.389 5.191 1,000,000,000 923890000 Net Margin 3.01% 11.24% 7.07% 8.55% 9.89% 3.8 8/2/2042 72.248 6.011 400,000,000 288992000 Return on Assets % 2.35 11.4 7.07 8.53 9.95 4.8 3/15/2048 83.157 6.031 700,000,000 582099000 Return on Equity % 17.39 56.1 38.76 46.14 57.77 Total 7,150,000,000 6,724,880,000 Return on Invested Capital % 5.48 18.77 12.09 13.76 15.9 Last Stock Price Mkt Cap Beta Tax Rate -> Liquidity/Financial Health 2018-07 2017-07 2016-07 2015-07 2014-07 39.52 12.19 bil -0.1846 30% Current Ratio 0.64 0.79 0.75 0.75 0.7 Growth per year* Quick Ratio 0.28 0.39 0.36 0.32 0.3 -1.35 Financial Leverage 10.65 4.72 5.14 5.86 5.02 *Estimated Debt/Equity 5.86 1.53 1.52 1.85 1.39 Interest Coverage 2.35 12.54 8.38 10.17 9.8 Working Capital USD Mil -1,298 -495 -647 -714 -889 -> Efficiency Ratios Receivables Turnover 12.5 12.82 12.51 12.27 12.67 Inventory Turnover 5.59 5.25 5.36 5.25 5.53 Fixed Assets Turnover 3.05 3.25 3.35 3.46 3.61 Asset Turnover 0.78 1.01 1 1 1.01 Total Return % To Date 1-Year 3-Year 5-Year 10-Year 15-Year CPB -21.68 -18.77 -7.07 1.18 2.35 4.65 Packaged Foods -13.25 -8.68 0.67 4.3 8.09 8.8 S&P 500 TR USD 10.56 17.91 17.31 13.95 11.97 9.65