1. FINANCIAL STATEMENT
ANALYSIS

2. INTRODUCTION
General Mills (NYSE: GIS) is an American company which was established in 1928, when it was first listed
in New York Stock Exchange. It is a leading producer of packaged foods. It’s popular products include
breakfast cereals, snacks, prepared mixes, flour and similar products. Headquartered in Minneapolis,
Minnesota it is one of the largest packaged food manufacturer in the world. The company is listed in
the New York Stock Exchange
Source: www.nyse.com/quote/XNYS:GIS
As on Dec 04, 2015 the last the last quoted
price of the stock was $58.32 (USD). Last or
closing price is the price at which a security
was traded on the given day.
Market Capitalization: The total dollar market
value of all of a company's outstanding
shares. Market capitalization is arrived at by
multiplying the total number of outstanding
shares of a company by the market price/
value of a share at that time. This is used by
the investor in order to determine a
company's size, with relevance to its sales or
its total asset figures. [R1]
Outstanding Shares: The shares owned by
stock holders, investors and company officials
are outstanding shares. Note: Outstanding shares
do not include the shares owned by the company itself
(Treasury Stock and unissued shares. [R2]Capital Risk Return
Large Cap $10 Billion+ Low Low
Mid Cap $2 Bn. - $10 Bn. Medium Medium
Small Cap Less than $2 Bn. High High
General Mills Inc has a market
capitalization of $34.23 billion. It falls under
Large Cap category.
It’s competitor, Kellogg’s has a market
capitalization of $24.92 Billion [R3]. It also
falls under the category of a large cap
company.
Source: http://www.investopedia.com/terms/m/marketcapitalization.asp

3. FINANCIAL RATIOS OF GENERAL MILLS v/s KELLOGG’S
When should an investment be made in a company?
First, the financial performance of a company must be evaluated to make a decision on whether or not
to invest in a company. Financial statements of the past five years must be analyzed to check the
company’s track record. Here we compare the performance of General Mills with its competitor
Kellogs’. This was done by comparing their financial ratios over the past few years. It is shown in the
following table. 2014 2013 2012 2011 2010
G.M KELLOGG G.M KELLOGG G.M KELLOGG G.M KELLOGG G.M KELLOGG
Ratios required for the investors
EARNINGS PER SHARE [Net income - Dividends
on preferred stock / Average outstanding shares]
$2.82 $1.75 $2.69 $4.94 $2.56 $2.67 $2.48 $3.38 $2.30 $3.30
P/E RATIO [Market value price per share/Earnings
per share]
19.08 37.12 18.21 13.00 15.27 18.48 15.84 16.39 15.49 15.35
DIVIDEND YIELD RATIO [Cash dividends per
share/ market value per share]
2.88% 2.92% 2.69% 2.80% 3.12% 3.52% 2.85% 3.01% 2.70% 3.08%
EBITDA MARGIN [NOPBT/Total revenue] 16.51% 7.02% 16.04% 19.17% 15.38% 11.00% 18.64% 14.97% 17.80% 16.05%
NOPBT [Net-Operating Profit Before Tax]
$
2,957.40
$ 1,024.00 $ 2,851.80
$
2,837.00
$
2,562.40
$ 1,562.00 $ 2,774.50 $ 1,976.00
$
2,606.10
$
1,990.00
NOPAT [Net-Operating Profit After Tax]
$
2,174.71
$
882.85
$ 2,203.26
$
2,115.20
$
1,965.76
$ 1,263.91 $ 2,156.25 $ 1,543.86
$
1,975.38
$
1,559.45
ROE [Return on Equity] 24% 20% 27% 61% 25% 46% 31% 44% 29% 58%
Ratios required for loan lenders
DEBT TO EQUITY RATIO [Total liability / Total
equity]
2.3 4.31 2.18 3.29 2.06 5.12 1.82 5.75 2.13 4.5
CURRENT RATIO [Current assets/current
liabilities]
0.81 0.765 2.352 0.851 0.96 0.747 1.066 0.926 0.923 0.915
Ratios required for loan lenders and investors
INVENTORY TURNOVER [Cost of goods sold /
Average Inventory]
7.43 7.53 7.51 6.63 6.87 6.9 6.05 7.08 6.63 7.23
GROSS MARGIN RATIO [Gross margin / Net
sales] where [Gross margin = Net sales - COGS]
0.355 0.347 0.361 0.412 0.362 0.382 0.4 0.412 0.396 0.426
RNOA [Return on Net Operating Asset]
14% 9% 14% 20% 14% 15% 18% 21% 17% 22%

4. ANALYSIS OF FINANCIAL RATIOS FOR INVESTORS
EARNINGS PER SHARE (EPS)
The part of the proit of a company that is allotted to every
outstanding share. Earnings per share thus serves as an
important indicator of the profitability of a company.[R4] In other
words, it is the profit a shareholder gets for each share he
owns.
EPS
Net Income Dividends Outstanding Shares EPS
Company A $ 1,000,000.00 200,000.00 100,000.00 $ 8.00
Company B $ 2,000,000.00 200,000.00 300,000.00 $ 6.00
For example:
Note that, though Company B reported higher net income, EPS
for Company A is higher. This indicates that investment
decisions cannot be made based only on net income.
From FY 2010-2013, Kellogg’s has higher EPS
than General Mills, but the EPS of General Mills
improved over Kellogg’s in 2014.
Price-Earnings (P/E) RATIO
The price-earnings ratio indicates the dollar amount an
investor may expect to invest in a company in order to get
back a dollar from the earnings of that company. This is
the reason why this ratio is often referred to as the
multiple as it exhibits how much an investor is ready to
pay for each dollar earned.[R5]
Simply put, it is the ratio that tells how much money you
put in order to earn $1 on a share. If your P/E is $20, it
means that you invested $20 to get $1. The more P/E, the
riskier it is to invest in that company. This ratio is used to
compare two or more companies.
P/E = Market value price per share/ Earnings per shareFor FY 2014, 2012 and 2011 General Mills had a
lower P/E ratio.

5. DIVIDEND YIELD RATIO
This is a financial ratio that is used to measure the cash
dividend amounts that are distributed to the common
stockholders in relation to the market value of a share. The
dividend yield ratio is useful to the investors to exhibit how
their investment in a share is either producing cash flows as
dividends or if there is an increase in the value of the asset
due to appreciation of the stock . [R7]
Dividend Yield Ratio = Cash dividends per share/Market value
per share
For example, a company decides to pay a dividend of $5 per
share. It’s stock price is $50, which means that the investor
bought each stock for $50. To compute the percentage he
receives through dividends, investor checks the dividend yield
ratio. In this case it’s 5/50=0.1 or 10% yield through dividend
on each share. Investors look for a higher ratio.
From FY 2010-2014, Kellogg’s had higher dividend
yield ratio than General Mills.
EBITDA RATIO
EBITDA is the revenue (or income ) of a company which does
not include obligations like interest, taxes, depreciation and
amortization. In other words, it is the earnings a company
makes from it’s operations.
EBIDTA = Revenues – Expenses that exclude interest, taxes,
depreciation and amortization
EBIDTA is a profitability ratio that measures the profitability of
a company before it pays its interest, taxes, and taking into
account expenses like depreciation and amortization. [R9]
EBIDTA Ratio = EBIDTA / Total Sales
If the EBIDTA ratio is 10%, it means that for every $1 a
company generates in revenue, 10 cents are made in profit,
not considering taxes, interest, depreciation and amortization.
For FY 2014, 2010-2012 General Mills had higher
EBIDTA ratio than Kellogg’s.
ANALYSIS OF FINANCIAL RATIOS FOR INVESTORS

6. NOPBT [R11]
Net operating profit before tax (NOPBT) refers to the income
after deducting for operating expenses but before deducting
for income taxes and interest.
NOPBT= Sales - (Cost of goods sold+ Selling and marketing
expenses+ General and administrative expenses+
Depreciation+ Other operating expenses).
NOPAT
Net operating profit after tax (NOPAT) refers to the income
generated from operating activities after tax. It is the actual
amount that goes to the share holders, since dividends are
always given away after taxes.
NOPAT = NOPBT – Tax on operating profit
Tax on Operating profit = Tax Expense + Tax Shield
Tax Shield= Pretax net non-operating expense–Statutory tax rate
From FY 2010-2014, General Mills Kellogg’s has higher NOPAT
than Kellogg’s.
ROE
Return on Equity is a ratio that measures a corporation’s
profitability and reveals how much profit is generated by a
company produces with the shareholders’ investement. ROE is
given by:
ROE = NET INCOME/SHAREHOLDER’S EQUITY
Hence, It is an important ratio for the investor.
For FY 2010-2013 Kellogg’s has higher ROE than General Mills.
ANALYSIS OF FINANCIAL RATIOS FOR INVESTORS

7. CURRENT RATIO
The current ratio is both a liquidity and efficiency ratio. It
measures a firm's capability to pay off its short-term or
current liabilities with its current assets. The current ratio
is a significant measure of the company’s liquidity
because short-term liabilities are to be paid off within the
next year. [R10]
Current Ratio = Current Assets/Current Liabilities
If a company has 40% current ratio, it means that the
company has enough assets to pay 40% of its liabilities.
For FY 2010-2014 General Mills has higher current
ratio than Kellogg’s.
DEBT TO EQUITY RATIO
This ratio represents what percentage of the company’s
operations are financed by liabilities (like bank loans), and
what percentage of it is financed by equity (shareholders).
D/E ratio identifies the companies that are highly leveraged.
If the D/E ratio is 5, it means that the company has $5 in
debt for every $1 of equity. In other words, the company
borrowed $5 from bank and $1 from equity for its operations.
This ratio is measured by banks to decide whether a debt
investment can be made or not. The higher the D/E ratio, the
more risk it is for the banks to sanction a loan. From the
investor’s point of view, equity is expensive for the company
because it has to pay dividends on equity, whereas the
interest paid on debt is tax deductible. Debt to Equity = Total
Liabilities/ Total Equity .
From FY 2010-2014, GM has a lower D/E ratio
than Kellogg’s.
ANALYSIS OF FINANCIAL RATIOS FOR LENDERS

8. ANALYSIS OF FINANCIAL RATIOS FOR INVESTORS AND LENDERS
INVENTORY TURNOVER/ASSET UTILIZATION
This ratio indicates how many times the inventory is sold in a
period. If the ratio is higher, it indicates that the inventory is
sold, and replaced more frequently.
By definition, the inventory turnover ratio is a ratio that is used
to calculate efficiency. It shows how effectively inventory is
managed by comparing cost of goods sold with the average of
the inventory for a period. This measures how many times
average inventory is "turned" or sold during a period. [R6]
Inventory Turnover = COGS/ Avg. Inventory
If Inventory turnover is 10, it means that the company sold
and repurchased its inventory 10 times that year.
From FY 2010-2012 AND 2014, Kellogg’s had
higher inventory turnover than General Mills.
GROSS MARGIN TO SALES (GROSS MARGIN RATIO)
The gross margin ratio is a profitability ratio that
measures how profitably a company can sell its
inventory. It only means that higher ratios are more
desirable. Higher ratios mean that the company is selling
its inventory at a higher profit percentage. [R8]
Gross Margin Ratio = Net Sales – COGS /Net Sales
If the company’s gross margin ratio is 0.35 or 35%, it
means that on every $1 earned through net sales, $0.35
contributes to the gross margin. High ratios can be
achieved by either purchasing the inventory for less, or
by increasing the selling price.
From FY 2010-2013, Kellogg’s had higher gross
margin ratio than General Mills.

9. In conclusion, it is seen that GENERAL MILLS is poised for better growth because their NOPBT and NOPAT have
been consistently better than that of Kellogg's. Further, considering the growth prospects, the stock of General
Mills is priced lower at a PE multiple of 19.08 against 37.12 of Kellogg's for the FY 2014. The EBITDA margin of
General Mills is also higher at 16.51% for the FY 2014 against 7.02% of Kellogg's. On the other hand, it is
noticed that the RNOA and ROE of Kellogg's have fallen over the years. Therefore, General Mills is a better
candidate for making an equity investment than Kellogg's. The Debt Equity Ratio of General Mills also is healthier
at 2.3 against 4.3 of Kellogg's, which qualifies General Mills as a better target of considering an investment in
Debt as well.
RNOA
Return on net operating assets (RNOA) refers to the operating
income relative to the net operating assets. It is given by the
formula,
RNOA = NOPAT / Avg. NOA
RNOA is important for both lenders and investors. For lenders it
is vital for knowing whether the business is running healthy. For
an investor it is helpful to determine the value of the assets the
company owns in order to invest in it.
ANALYSIS OF FINANCIAL RATIOS FOR INVESTORS AND LENDERS

10. FINANCIAL RATIOS CALCULATION: GENERAL MILLS
TO FIND NOPAT (Net Operating Profit After Tax)
2015 2014 2013 2012 2011 2010
NOPBT (Net Operating
profit Before Tax) $ 2,077.30 $ 2,957.40 $ 2,851.80 $ 2,562.40 $ 2,774.50 $ 2,606.10
Pre-tax Net Non-
operating Expense $ 315.40 $ 302.40 $ 316.90 $ 351.90 $ 346.30 $ 401.60
Statutory Tax rate 33.33% 33.27% 29.24% 32.10% 29.70% 34.98%
Tax shield [Pre-tax Net
non-operating expense *
Statutory tax rate] $ 105.12 $ 100.61 $ 92.66 $ 112.96 $ 102.85 $ 140.48
Tax Expense $ 586.80 $ 883.30 $ 741.20 $ 709.60 $ 721.10 $ 771.20
Tax on Operating Profit
[Tax Expense +/- Tax
shield] $ 481.68 $ 782.69 $ 648.54 $ 596.64 $ 618.25 $ 630.72
NOPAT [ NOPBT - Tax
on Operating Profit ] $ 1,595.62 $ 2,174.71 $ 2,203.26 $ 1,965.76 $ 2,156.25 $ 1,975.38
TO FIND ROE (Return
On Equity)
2015 2014 2013 2012 2011 2010
Net Income $ 1,221.30 $ 1,567.30 $ 1,855.20 $ 1,567.30 $ 1,798.30 $ 1,530.50
Average Stockholder's
Equity $ 5,765.75 $ 6,603.50 $ 6,777.45 $ 6,393.60 $ 5,884.20 $ 5,287.60
ROE [Net
Income/Average
Stockholder's Equity] 21.18% 23.73% 27.37% 24.51% 30.56% 28.95%
APPENDIX

11. FINANCIAL RATIOS CALCULATION: GENERAL MILLS
TO FIND NOA(Net
Operating Profit)
OPERATING ASSET 2015 2014 2013 2012 2011 2010
Accounts Receivable $ 1,386.70 $ 1,483.60 $ 1,446.40 $ 1,323.60 $ 1,162.30 $ 1,041.60
Inventories $ 1,540.90 $ 1,559.40 $ 1,545.50 $ 1,478.80 $ 1,609.30 $ 1,344.00
Deferred Income tax $ 100.10 $ 74.10 $ 128.00 $ 59.70 $ 27.30 $ 42.70
Prepaid expenses &
other current assets $ 423.80 $ 409.10 $ 437.60 $ 358.10 $ 483.50 $ 378.50
Land, building &
Equipment $ 3,783.30 $ 3,941.90 $ 3,878.10 $ 3,652.70 $ 3,345.90 $ 3,127.70
Goodwill $ 8,874.90 $ 8,650.50 $ 8,622.20 $ 8,182.50 $ 6,750.80 $ 6,592.80
Other intangible assets $ 4,677.00 $ 5,014.30 $ 5,015.10 $ 4,704.90 $ 3,813.30 $ 3,715.00
Other assets $ 843.60 $ 1,145.50 $ 843.70 $ 865.30 $ 862.50 $ 763.40
Total Operating Assets $ 21,630.30 $ 22,278.40 $ 21,916.60 $ 20,625.60 $ 18,054.90 $ 17,005.70
OPERATING LIABILITY 2015 2014 2013 2012 2011 2010
Accounts payable $ 1,684.00 $ 1,611.30 $ 1,423.20 $ 741.20 $ 1,031.30 $ 849.50
Other current liabilities $ 1,589.90 $ 1,449.90 $ 1,827.70 $ 1,426.60 $ 1,321.50 $ 1,762.20
Deferred Income taxes $ 1,550.30 $ 1,666.00 $ 1,389.10 $ 1,171.40 $ 1,127.40 $ 874.60
Other liabilities $ 1,744.80 $ 1,643.20 $ 1,952.90 $ 2,189.80 $ 1,733.20 $ 2,118.70
Total Operating Liabilities $ 6,569.00 $ 6,370.40 $ 6,592.90 $ 5,529.00 $ 5,213.40 $ 5,605.00
NOA [ Total operating
Assets - Total
Operating Liability]
$ 15,061.30 $ 15,908.00 $ 15,323.70 $ 15,096.60 $ 12,841.50 $ 11,400.70
TO FIND RNOA [Return on net
operating Asset]
2015 2014 2013 2012 2011 2010
NOPAT $ 1,595.62 $ 2,174.71 $ 2,203.26 $ 1,965.76 $ 2,156.25 $ 1,975.38
Average NOA $ 15,484.65 $ 15,615.85 $ 15,210.15 $ 13,969.05 $ 12,121.10 $ 11,718.90
RNOA [NOPAT/Average
NOA]
10.30% 13.93% 14.49% 14.07% 17.79% 16.86%

12. FINANCIAL RATIOS CALCULATION: KELLOGG’S
TO FIND NOPAT (Net Operating Profit After Tax)
2015 2014 2013 2012 2011 2010
NOPBT (Net Operating profit
Before Tax) $ 1,024.00 $ 2,837.00 $ 1,562.00 $ 1,976.00 $ 1,990.00
Pre-tax Net Non-operating
Expense $ 199.00 $ 231.00 $ 237.00 $ 244.00 $ 248.00
Statutory Tax rate 22.54% 30.39% 27.39% 29.04% 28.81%
Tax shield [Pre-tax Net non-
operating expense *
Statutory tax rate] $ - $ 44.85 $ 70.20 $ 64.91 $ 70.86 $ 71.45
Tax Expense $ 186.00 $ 792.00 $ 363.00 $ 503.00 $ 502.00
Tax on Operating Profit [Tax
Expense +/- Tax shield] $ - $ 141.15 $ 721.80 $ 298.09 $ 432.14 $ 430.55
NOPAT [ NOPBT - Tax on
Operating Profit ] $ -
$ 882.85 $ 2,115.20 $ 1,263.91 $ 1,543.86 $ 1,559.45
TO FIND ROE (Return On
Equity)
2015 2014 2013 2012 2011 2010
Net Income
$
- $ 632.00 $ 1,807.00 $ 961.00 $ 866.00 $ 1,287.00
Average Stockholder's Equity
$
- $ 3,167.00 $ 2,974.50 $ 2,107.50 $ 1,959.00 $ 2,215.00
ROE [Net Income/Average
Stockholder's Equity] NA
19.96% 60.75% 45.60% 44.21% 58.10%
TO FIND RNOA [Return on net operating
Asset]
2015 2014 2013 2012 2011 2010
NOPAT $ - $ 882.85 $ 2,115.20 $ 1,263.91 $ 1,543.86 $ 1,559.45
Average NOA $ - $ 10,235.00 $ 10,396.50 $ 8,714.50 $ 7,471.00 $ 7,217.50
RNOA [NOPAT/Average
NOA] NA
8.63% 20.35% 14.50% 20.66% 21.61%

13. FINANCIAL RATIOS CALCULATION: KELLOGG’S
TO FIND NOA(Net Operating
Profit)
OPERATING ASSET 2015 2014 2013 2012 2011 2010
Accounts Receivable
$
- $ 1,276.00 $ 1,424.00 $ 1,454.00 $ 1,188.00 $ 1,190.00
Inventories
$
- $ 1,279.00 $ 1,248.00 $ 1,365.00 $ 1,132.00 $ 1,056.00
Other current assets
$
- $ 342.00 $ 322.00 $ 280.00 $ 247.00 $ 225.00
Property, net
$
- $ 3,769.00 $ 3,856.00 $ 3,782.00 $ 3,281.00 $ 3,128.00
Goodwill
$
- $ 4,971.00 $ 5,051.00 $ 5,053.00 $ 3,623.00 $ 3,628.00
Other intangible assets, net
$
- $ 2,295.00 $ 2,367.00 $ 2,359.00 $ 1,454.00 $ 1,456.00
Other assets
$
- $ 778.00 $ 933.00 $ 610.00 $ 516.00 $ 720.00
Total Operating Assets
$
- $ 14,710.00 $ 15,201.00 $ 14,903.00 $ 11,441.00 $ 11,403.00
OPERATING LIABILITY 2015 2014 2013 2012 2011 2010
Accounts payable
$
- $ 1,528.00 $ 1,432.00 $ 1,402.00 $ 1,189.00 $ 1,149.00
Other current liabilities
$
- $ 1,401.00 $ 1,375.00 $ 1,301.00 $ 1,129.00 $ 1,039.00
Deferred Income taxes
$
- $ 726.00 $ 928.00 $ 523.00 $ 643.00 $ 697.00
Pension liability
$
- $ 777.00 $ 277.00 $ 886.00 $ 560.00 $ 265.00
Other liabilities
$
- $ 500.00 $ 497.00 $ 690.00 $ 592.00 $ 639.00
Total Operating Liabilities
$
- $ 4,932.00 $ 4,509.00 $ 4,802.00 $ 4,113.00 $ 3,789.00
NOA [ Total operating Assets -
Total Operating Liability]
$
-
$ 9,778.00 $ 10,692.00 $ 10,101.00 $ 7,328.00 $ 7,614.00

14. REFERENCES
R1. http://www.investopedia.com/terms/m/marketcapitalization.asp
R2. http://www.investinganswers.com/financial-dictionary/stock-market/shares-outstanding-3594
R3. http://finance.yahoo.com/q?s=K
R4. http://www.investopedia.com/terms/e/eps.asp
R5. http://www.investopedia.com/terms/p/price-earningsratio.asp
R6. http://www.myaccountingcourse.com/financial-ratios/inventory-turnover-ratio
R7. http://www.myaccountingcourse.com/financial-ratios/dividend-yield
R8. http://www.myaccountingcourse.com/financial-ratios/gross-margin-ratio
R9. http://www.myaccountingcourse.com/financial-ratios/ebitda
R10. http://www.myaccountingcourse.com/financial-ratios/current-ratio
R11. http://www.istockanalyst.com/glossary/NOPBT