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Accounting Case Study on General Mills
General Mills, Inc.
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.
2. Sales increased each year from 2000 to 2002. The difference between the year 2000 and
2001 was a 5.35% increase (5,450-5,173/5,173 = .0535). The difference between the year
2001 and 2002 was a 45.85% increase (7,949-5,450/5,450 = .4585).
3. The largest expense for General Mills for the years 2000, 2001, and 2002 was the same;
over 50% of the revenue each year went towards the cost of sales. Sales in 2002 were the
largest, about 7% more than the two previous years.
2000: (2,698/5,173) = .522 = 52.2% 2001: (2,841/5,450 = .521 = 52.1% 2002:
(4,767/7,949) = .599 = 59.9% 4. Net Income: 2000: $614 million 2001: $665 million 2002:
$458 million When comparing the net income figures for the past three years, it is seen
that between 2000 and 2001, the net income increased by $51 million, but between 2001
and 2002, the net income decreased by $207 million.
5. A companys stock price is usually influenced by the amount of net income because
when finding the price of the stock, you must divide the number of stocks by the net
income. So, the higher the net income, the lower the price of stocks, which is what buyers
look for (means better profit).
6. Even though General Mills paid dividends in 2000, 2001 and 2002, the corresponding
total dividend payments did not appear as an expense on the income statement because
dividends are not an expense; they are a financing activity that is reported on the statement
of stockholders equity. They are payments that are made to only the owners of the
company.
B. General Mills Consolidated Balance Sheets: 7. A company has assets so that they have a
location and equipment to operate/create a business. Assets are resources that are
controlled by a business. Without assets, one cannot produce and/or run a company. The
purpose of assets are to keep track of expenses, what a company owns, like equipment,
inventory, cash etc., and creates value for the company.
8. The total amount of assets at the end of 2002 was $16,540 million.
9. When comparing the assets from the beginning of 2002 to the end, we found that the
percentage increase in assets was 224.89% ( 16,540-5,091/5,091 = 2.2489 = 224.89%).
