Financial Statement Analysis Case
Financial Statement Analysis of Long-Term Fixed Assets
Kellogg Company and Kraft Heinz Company. Inc. are two companies operating in the packaged food industry You have noticed their products in numerous grocery and convenience stores and are interested in their production process Your first step is to analyze the information on their productive capacity Examine the fixed asset disclosures m the two companies' financial statements to address the following issues.
- a. What categories of tangible long-lived assets does each company report? What is the useful life of each category? Compare the categories and useful lives disclosed by each company.
- b. For each company, what is the percent of long-lived tangible assets to total assets in 2016 and 2015? In the definition of long-lived tangible assets, include the total of property, plant, and equipment (PPE) - net Comment on any differences between the two companies.
- c. Compute average age and average remaining life for 2016 and 2015 Comment on any differences between the two companies
- d. Compute the fixed asset turnover in 2016 In the definition of long-lived tangible assets (fixed assets) include the total property, plant and equipment (PPE) - net Comment on any differences between the two companies
Kellogg Company
NOTE 1 Accounting Policies
Property
Kellogg Company
NOTE 1 Accounting Policies
Property
The Company's property consists mainly of plants and equipment used for manufacturing activities. These assets are recorded at cost and
NOTE 19: Supplemental
2016 | 2015 | |
Land | $ 131 | $ 142 |
Buildings | 2,020 | 2,076 |
Machinery and equipment | 5,646 | 5,617 |
Capitalized software | 366 | 328 |
Construction m progress | 686 | 694 |
(5,280) | (5,236) | |
Property, net | $3,569 | $3,621 |
Additional financial statement information
(dollars in millions) | 2016 | 2015 |
Revenues | $ 13,014 | $ 13,525 |
Depreciation Expense | $ 510 | S 526 |
Total Assets | $15,111 | $ 15,251 |
Average Net Fixed Assets | $ 3,595 | $ 3,695 |
Source Kellogg Company. Annual Report. December 2016 http://investor.kelloggs.com/∼/media/Files/K/Kelllogg-IR/Annual%20Reports/kellogg-20l6-
Kraft Heinz Company, Inc.
NOTE 1: Summary of Significant Accounting Policies (excerpt)
Property, Plant and Equipment:
Property, plant, and equipment are stated at historical cost and depreciated by the straight-line method over the estimated useful lives of the assets Machinery and equipment are depreciated over periods ranging from 3 to 20 years and buildings and improvements over periods up to 40 years.
NOTE 5: Property, Plant, and Equipment
Property, Plant, and Equipment:
Property, plant, and equipment at December 31, 2016 and January 3, 2016 were (in millions):
(in millions) | December 31, 2016 | January 3, 2016 |
Land | $ 264 | $ 297 |
Buildings and improvements | 1,884 | 1,700 |
Machinery and equipment | 4,770 | 4,432 |
Construction in progress | 1,600 | 1,001 |
8,518 | 7,430 | |
Accumulated depreciation | (1,830) | (906) |
Property, plant, and equipment, not | $ 6,688 | $6,524 |
Additional financial statement information:
(dollars in millions) | 2016 | 2015 |
Revenues | $ 26,487 | $ 18,338 |
Depreciation Expense | $ 1,337 | $ 740 |
Total Assets | $120,480 | $122,973 |
Average Net Fixed Assets | $ 6,606 | $ 4,445 |
Source: Kraft Heinz Company, SEC Filing, 2016 https://www.sec.gov/Archives/edar/datal/163743000169745917000007/khc201610kt.htm
Additional financial statement information:
Source: Kellogg Company. Annual Report. December 2016. http://investor.kelloggs.com/∼/media/Files/K/Kelllogg-IR/Annual%20Reports/kellogg-20l6-ar-104.PDF
Kraft Heinz Company. Inc.
NOTE 1 Summary of Significant Accounting Policies (excerpt)
Property Plant and Equipment
Additional financial statement information:
Source: Kellogg Company. Annual Report. December 2016. http://investor.kelloggs.com/∼/media/Files/K/Kelllogg-IR/Annual%20Reports/kellogg-20l6-ar-104.PDF
Kraft Heinz Company. Inc.
NOTE 1 Summary of Significant Accounting Policies (excerpt)
Property Plant and Equipment
Property plant and equipment are stated at historical cost and depreciated by the straight-line method over the estimated useful lives of the assets Machinery and equipment are depreciated over periods ranging from 3 to 20 years and buildings and improvements over periods up to 40 years.
NOTE 5 Property, Plant, and Equipment
Property, Plant, and Equipment
Property, plant and equipment at December 31, 2016 and January 3, 2016 were (in millions)
Additional financial statement information:
Source: Kraft Heinz Company, SEC Filing, 2016 https://www.sec.gov/Archives/edar/datal/163743000169745917000007/khc201610kt.htm
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