The following information from the financial statements of Kraft Foods and Cadbury PLC is available for the three years prior to their merger. Evaluate the performance of each company leading up to the year of the acquisition (2010). Note that Cadbury’s financial statements are in millions of pounds, while Kraft’s statements are in millions of dollars.

Required:
A. Use the method described in Appendix A to evaluate the health of the target company, and point out any trends that might have been worrisome to Kraft. Also indicate any strengths in the firm’s performance.
B. Use the method described in Appendix A to evaluate the health of Kraft Foods, and point out any positive or negativetrends.

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Kraft Foods (S millions) 2007 2008 2009 Balance Sheet Assets Total Liabilities Stockholders' Equi Selected Balance Sheet items Market value of equity Current Assets Current Liabilities Accounts Receivable 67,993 40,698 27,295 63,173 40,817 22,356 66,714 40,742 25,972 50,480 10,737 17,086 5,197 4,096 13,624 12,209 48,110 9,917 11,044 4,704 3,881 19,354 13,440 40,111 12,454 11,491 5,197 3,775 18,537 14,636 nventory Long-term Debt Retained Earnin Income Statement Total Revenues Cost of Goods Sold Gross Margin Income continuing operations Net income Selected Income Statement items Interest Expense Tax Expense 37,241 24,651 12,590 2,590 2,590 40,492 27,164 13,328 1,678 2,884 38,754 24,819 13,935 2,810 3,021 604 1,137 1,240 658 1,237 1,136 Statement of Cash Flows Cash from Operations (CFO) Cash interest paid Cash taxes paid Cadbury (E millions) 3,571 628 1,366 2007 5,084 1,308 1,025 2009 968 964 2008 Balance Sheet Assets Total Liabilities Stockholders' Equi Selected Balance Sheet items Market value of equity Current Assets Current Liabilities Accounts Receivable Inventory Long-term Debt Retained Earnings 11,338 8,895 5,361 3,534 8,129 4,607 3,522 4,173 9,581 2,600 4,614 1,197 821 1,120 2,677 8,241 2,635 3,388 1,067 12,266 2,125 2,434 978 1,194 2,498 1,349 3,502 In Total Revenues Cost of Goods Sold Gross Margin Income continuing operations Net income Selected Income Statement items Interest Expense Tax Expense come Statement 4,699 2,195 149 405 5,384 2,870 2,514 370 364 5,975 3,210 2,765 275 509 172 103 105 Statement of Cash Flows Cash from Operations (CFO) Cash interest paid 193 235 469 165 153 523 122 Cash taxes paid