9.

1
1 General Mill's
2010 2009
Current Assets $ 3,480.0 $ 3,534.9
Current Liaibilities $ 3,769.1 $ 3,606.0
Current Ratio 0.92 0.98

2 2010
GM Kellogg's
Current Assets $ 3,480.0 $ 2,915.0
Current Liaibilities $ 3,769.1 $ 3,184.0
Current Ratio 0.92 0.92

The current ratios of both businesses are almost identical, and both are less than one in terms of profitability. In
this case, it is clear that the businesses' present obligations exceed their current assets. Because of this, they
may find themselves unable to meet their existing obligations unless more funds are raised.

3 Yes, if a lawsuit or other legal process is filed against Kellogg's or General Mills, they will both be held liable for
any damages that result. However, since they are not deemed to have an effect on the financial accounts, they
are included in the Notes section of the financial statements rather than in the financial statements
themselves, which is the preferred method.

9.3
1
In a similar vein, if the business thinks it has significant factual and legal defenses to the asserted claims, such
defenses should not be recorded on the balance sheet since they do not satisfy the likely criteria and cannot be
assessed correctly. However, the contingencies must be disclosed in the notes to the financial statements, as
opposed to the financial statements themselves.

If you have a contingent obligation and it is accrued, your liabilities rise and a contingency cost is incurred, which
reduces your company's net income.
2 Accrual is not needed since management is unable to foresee how this issue will be handled in the end. Because it
is very improbable, it cannot be examined in a thorough manner..

10.2
1 2010
GM Kellogg's
Total Liabilities $ 12,030.9 $ 9,693.0
Total Shareholder's
Equity $ 5,648.0 $ 2,154.0
Debt-to-Equity Ratio 2.13 4.50

The debt-to-equity ratios of both companies are very high. When compared to General Mills, Kellogg's has a higher
debt-to-equity ratio. Investors may be concerned as a result of this.

2
 Long-term liabilities have decreased for General Mill's whereas long-term debts have increased for Kellogg's.

Long-term debts have decreased for General Mill's and the cash has also
decreased. Long-term debts have increased for Kellogg's and the cash has also
increased.

3
Kellogg's main sources of cash are the acquisition of common stock and the payment of dividends, while the
company's principal uses of cash are the purchase of common stock and the payment of dividends, respectively.

General Mills' major sources of revenue are the issuance of notes payable and the receipt of dividends on its common stock,
and its chief uses of cash are the repayment of long-term debt and the purchase of new equipment.

Increasing long-term obligations corresponds to the issue of long-term debt and a rise in cash; decreasing long-
term liabilities corresponds to the repayment of long-term debt and a reduction in cash.

11.1
1 Shares of Common Stock
Authorized Issued Outstanding
Kellogg's 1,000,000,000 419,272,027 365,604,392
General Mill's 754.6 million 656.5 million

2 For Kellogg's, Retained Earnings balance increased from $5481M to $6122M.

For General Mill's, Retained Earnings balance increased from $7235.6M to $8122.4M.

Net Income increases Retained Earnings Balance and Dividends payout decreases Retained Earnings Balance.

3 Total Stockholder's equity for General Mill's: $5648M

Total Stockholder's equity for Kellogg's: $2154M

Although there is a numerical difference between the two companies, this does not indicate that one's shares
are more valuable than the other. While it is true that a large corporation's shareholder equity is high, this does
not always indicate that the company's stock is more valuable.