You are considering making a loan to Kellogg's. The following information is from the statements of cash flows and the notes to the consolidated financial statements included in Form 10-K for fiscal years 2012 and 2011 (in millions of dollars):

From the 2012 Form 10-K: Scheduled principal repayments on long-term debt are (in mil-lions): 2013-$759; 2014-$316; 2015-$355; 2016-$1,255; 2017-$404; 2018 and beyond-$3,703

From the 2011 Form 10-K: Scheduled principal repayments on long-term debt are (in mil-lions): 2012-$750; 2013-$752; 2014-$8; 2015-$1; 2016-$1,251; 2017 and beyond-$3,001

The following information is from General Mills' statements of cash flows and the notes to the consolidated financial statements included in Form 10-K for fiscal years 2012 and 2011 (in millions of dollars):

From the 2012 Form 10-K: Principal payments due on long-term debt in the next five years based on stated contractual maturities, our intent to redeem, or put rights of certain note holders are $741.2 million in fiscal 2013, $1,445.8 million in fiscal 2014, $1,066.7 million in fiscal 2015, $0.3 million in fiscal 2016, and $1,000.0 million in fiscal 2017.

From the 2011 Form 10-K: Principal payments due on long-term debt in the next five years based on stated contractual maturities, our intent to redeem, or put rights of certain note holders are $1,031.3 million in fiscal 2012, $733.6 million in fiscal 2013, $1,402.6 million in fiscal 2014, $750.1 million in fiscal 2015, and less than $1.0 million in fiscal 2016.

Required

Part A. The Ratio Analysis Model
A lender must assess a company's ability to generate sufficient cash from operations to not only invest in property and equipment but also to make scheduled payments on long-term debt. The cash flow adequacy ratio helps a lender make this determination. Replicate the five steps in the Ratio Analysis Model onpages607-608 to analyze the cash flow adequacy ratios for Kellogg's and General Mills:
1. Formulate the Question
2. Gather the Information from the Financial Statements
3. Calculate the Ratio
4. Compare the Ratio with Other Ratios
5. Interpret the Ratios
Part B. The Business Decision Model
A lender must consider a variety of factors, including financial ratios, before making a loan. Replicate the five steps in the Business Decision Model on page 609 to decide whether to loan money to Kellogg's.
1. Formulate the Question
2. Gather Information from the Financial Statements and Other Sources
3. Analyze the Information Gathered
4. Make the Decision
5. Monitor Your Decision

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2012 2011 Net cash provided by operating $1,758 (533) $1,595 (594) activities Additions to properties 2012 2011 Net cash provided by operating activities $2,402.0 $1,526.8 Purchases of land, buildings, and equipment (675.9) 648.8)