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Historical and Financial Analysis of General Mills

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HISTORICAL AND FINANCIAL ANALYSIS GENERAL MILLS (GIS)
DUPONT ANALYSIS
When analyzing the DuPont model, we determined that GIS has a higher profit margin, low asset turnover ratio, and low financial leverage versus the industry average, leading GIS not to perform with the same efficiency as the Industry Composite. GIS’s return on equity (ROE) was 28.25% in 2011, dipped to 24.41% in 2012, and then rose to 27.80% in 2013. GIS three-year average ROE of 26.82% is below the industry three-year median of 30.78%. This is largely attributable to a decrease on Equity due to the acquisitions that began on 2011. GIS asset turnover ratio remained steady for the past three years with a median of 0.79; however, competitors achieved a higher asset turnover ratio, of 1.07. The three-year average equity multiplier of 3.21 shows that their financial leverage is slightly lower compared to the industry median of 3.33, which indicates that the company relies less on debt rather than equity to finance its assets.
LIQUIDITY
WWAV current and quick ratios trended downward and remained lower than the industry’s average of 2.33 and 0.75. In 2011, the company’s current ratio was 1.58 but dropped to 1.19 in 2012 indicating an increase of current liabilities year over year. While WWAV current liabilities are increasing, their current assets rising only slightly. The company’s quick ratio in 2011 was 1.04 and trended down to its current 0.73 standing, which is slightly lower than the median quartile.
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