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1. General Mills and Kellogg's both use the indirect method for Operating Activities in the cash flow.
The calculation will begin with net income and will be reconciled to net cash flow from operations.
2. There is an increase of $353 million in net cash due Operating Activities in General Mills. The largest
adjustment is $457.1 million in depreciation and amortization.
For Kellogg, net cash from operating activities has decreased by $635 million. The most significant
contribution of $643 million is done by pension and other post-retirement benefit.
3. General Mills spent $ 649.9 million to acquire property and equipment in 2010, while Kellogg spent
$ 474 million.
Compared to the previous year, General Mills spent an additional of $ 87.3 million and Kellogg spent
an additional of $ 97 million in 2009.
4.
Kellogg (In Millions)
Issuances of Long-Term Debt $ 987
Common Stock Purchases $ 1052
General Mills
Proceeds from common stock issued on exercised options $ 388.8
Purchases of common stock for treasury $ 691.8
In the recent year, both the companies repurchased some of their shares.
Other considerations for repurchasing common stock for balancing company’s financial well being
include:
- Available stock for distribution to shareholders
- Maintaining market price
- Ownership reasons
- Maintaining the company's financial ratios, thereby balancing the firm's financial well-being.
1. Cash Flow Adequacy Ratio = (Cash Flow from Operating Activities - Capital Expenditure) / Average
Debt Over the Next Five Years
2. According to the cash flow adequacy ratio, both companies' cash is sufficient to repay their
respective debts maturing in the next five years. However, General Mills' ratio is significantly higher
than Kellogg's.