General Mills Inc. Understanding Financial Statements Essay

“Assets are economic resources that have expected future benefits to the business” (Baker, 2014). There are short and long term assets. Short-term assets are assets that will be utilized within a year. Examples of short-term assets are cash, inventory, and accounts receivable. Long-term assets are assets that will continue to beneficial longer than a year. Examples of long-term assets are buildings, land, and equipment.

General Mills, Inc (GMI). produces and markets branded consumer foods globally. They also supply branded and unbranded food products to the foodservice and commercial banking industries. It offers ready-to-eat cereals, refrigerated yogurt, ready-to-serve soups, dry dinners, shelf stable and frozen vegetables, refrigerated and frozen dough products, dessert and baking mixes, frozen pizza and pizza snacks, grains, and fruit and savory snacks; a range of organic products, including soups, granola bars, and cereals; and ice cream and frozen desserts, and grain snacks. According to General Mills Inc. the company retails its products through direct sales personnel, as well as through broker, distribution to

The purpose of the Auditors report was to check the conformance of the Company financial report;

Current assets: 2011 Cash and cash equivalents Short-term investments Accounts receivable Prepaid expenses and deposits Loan receivable (note 2) Derivative financial instrument - short term Restricted cash and cash equivalents (note 3) Other assets Capital assets (note 4) $ 13,397 4,130 12,325 17,091 4,290 1,352 52,585 11,808 – 264,350 $ 2010 10,420 10,772 1,739 75,992 – 1,544 100,467 113,040

b.) The financial statements that are commonly prepared for external reporting purposes are the Balance Sheet, Income Statement, and Statement of Cash Flows. General Mills gives these statements a title of Consolidated Statements of Earnings, Consolidated Balance Sheets and Consolidated statements of Cash Flows. Consolidated means that General Mills is factoring in all of its subsidiaries into its aggregated accounting figures that are represented on these statements.

Financial Accounting Case Study Module 1: A. General Mills Consolidated Statements of Earnings: 1. The recorded sale amount of almost $8 billion is not the actual amount of cash collected. The amount of $8 billion includes cash and credit sales.

The reason for this is due to common sized current assets of 39.7 being 42% below the average of the industry at 68.2 while common size current liabilities of 28.3% is only 1.7% below the RMA common size of 29.1%.

Edward Jones mentioned that the statement of financial condition was the responsibility of the partnership management and they have expressed an opinion on the financial statements that showed that an exam was done on a

Ernest & Young, LLC. (2011a). Impairment of long-lived assets, goodwill, and intangible assets. Retrieved from http://www.ey.com/Publication/vwLUAssets/Impairment_of_long_lived_assets,_goodwill_and_intangible_assets/$FILE/ME_Impairment%20goodwill%20and%20intangible.pdf

According to the financial report given, General Mills is an insolvent business. This is because even after making sum purchases and general expenses; it is still able to settle for them through its everyday operation. The various sources of money are also evidenced from the financial report.

Goodwill covers 92.64% of the total intangible assets as on 2016 with an increase of 1.28% from 2015. Goodwill here represents the goodwill acquired by the group through acquisitions of other companies and is subject to impairment test every year. The increase during the period of 2016 is negligible as there were $27.6m(approx.) worth of additions in goodwill during 2015, whereas the additions in 2016 were only $857k. No goodwill was impaired during the year. Goodwill related to theme parks was $4.37m for both 2015 and 2016 indicating no additions or impairment in both years.

Goodwill is a type of intangible asset which is measured when an entire company is purchased (TEXT pg658). “Conceptually, goodwill represents the future economic benefits arising from the other assets acquired in a business combination that are not individually identified and separately recognized” (TEXT pg659). Goodwill is not measured internally because the valuation is difficult and near to impossible to pair with the costs of creating it (TEXT pg659).

| Similar to fixed assets, intangibles are used (amortized) by a company for more than a year, and thus, they are considered non-current.

Goodwill is seen as an intangible asset on the balance sheet because it is not a physical asset such as buildings and equipment. Goodwill typically reflects the value of intangible assets such as a strong brand name, good customer relations, good employee relations and any patents or proprietary technology.

The intangible asset needs to be identifiable which means that the organization should be able to dispose of the asset without disposing off the whole of the business at the same time.