General Mills Analysis

1563 Words May 19th, 2011 7 Pages
Financial Analysis: General Mills Inc.
The following financial analysis is primarily focusing on the performance of General Mills Inc for the year 2010 when compared to 2009, but a historic trend of the past 5 financial years is also being taken into account.
Balance Sheet Analysis:
The Current Assets for GIS decreased for FY10 by nearly 2% compared to FY09, primarily due to a decline in quick assets, namely cash and cash equivalents. The company experienced a terrific growth period in FY08 when current assets grew by around 16%. Since then though, the company has witnessed slight reduction in the current assets portfolio. The Fixed Assets for GIS follow the same pattern as Current Assets, peaking in FY08 and then dwindling again. The
…show more content…
The short term liquidity position for the company peaked in FY09, which was still disturbing as it stood below 1X the ability to meet its short term liabilities. The dip for FY10 is again due to a decline in its cash and cash equivalents, or quick assets, which were utilized to pay taxes. The cash ratio and quick ratio follow a similar pattern and are at levels which put the company at risk, as well as major stakeholders.
Working Capital is again in the red zone, dropping more than 75% from FY09 to FY10. However, the historic trend for the company is not very impressive, with working capital dropping as low as -$3 billion. The Operating Cash Flow Ratio is somewhat more reassuring, standing at 18.13 in FY10 from 14.67 a year earlier. This implies that for every dollar of current liability, the operations are providing $18 of revenue to cover the expense. However, operations are not primarily meant to cover just short term obligations, but also long term costs. Thus it cannot be justified that operations are very adequate to meet ST obligations.
Leverage Ratios:
General Mills Inc. is a highly leveraged company. Although most of the key leverages are minutely down compared to the standing in FY09, they are still very high, which means that if

More about General Mills Analysis

Open Document