Financial Analysis of the General Mills Inc

Stock ticker symbol, exchange where traded: GIS, NYSE

Address of company headquarters: Number One General Mills Blvd PO Box 1113

Minneapolis, MN 55426 United States.

Company phone number 1-800-245-5703

Prepared by: Goutham Kumar Pakanati

Contents

Company Overview.........................................................................................................................4
a) Company History..................................................................................................................4
b) Organization......................................................................................................................4
c) Main Products and Services..................................................................................................5
d) Geographic Area of Operations........................................................................................5
e) Recent Developments...........................................................................................................5
PART 2, FINANCIAL OVERVIEW..............................................................................................7
a. Sales and Income Record......................................................................................................7
I. Graph Of Sales & Net Income, FY 2018 - 2022...............................................................7
II. Comments: On Sales & Net Income.............................................................................7
b. Expense Distribution............................................................................................................8
I. Pie Chart Of Expenses, FY 2022......................................................................................9
II. Comments: Comment on the company’s expense distribution.....................................9
c. Assets Distribution................................................................................................................9
I. PIE CHART OF ASSETS, Year-End FY 2022..............................................................10
II. Comments on Assets Distribution...............................................................................10
c. Capital Structure.......................................................................................................................11
a) Capital Structure Pie Chart, Year-End FY 2022.........................................................12
b) Comments: Comment On The Company’s Capital Structure.....................................12
PART 3, RATIO ANALYSIS:......................................................................................................13
a) LIQUIDITY:.......................................................................................................................13
Current Ratio:........................................................................................................................13
Quick Ratio:...........................................................................................................................13
Comments On The Company’s Liquidity:............................................................................13
b) ASSET MANAGEMENT...............................................................................................14
Total Asset Turnover:............................................................................................................14
Average Collection Period:....................................................................................................14
Comments On The Company’s Asset Management:.............................................................14
c) DEBT MANAGEMENT:...................................................................................................14
Total Debt to Total Assets:....................................................................................................15
Times Interest Earned:...........................................................................................................15
Comments On The Company’s Debt Management:..............................................................15
 d) PROFITABILITY:..........................................................................................................15
Net profit Margin:..................................................................................................................15
Return on Assets:...................................................................................................................16
Return on Equity:...................................................................................................................16
Modified Du Pont Equation, FY 2022:..................................................................................16
Comments On The Company’s Profitability:........................................................................16
e) MARKET VALUE RATIOS:............................................................................................17
PE Ratio:................................................................................................................................17
Market to Book Ratio:...........................................................................................................17
Comments On The Company’s Market Value Ratios:..........................................................17
References......................................................................................................................................19
Company Overview

General Mills is a multinational corporation that offers its wares on a worldwide basis. The firm

was founded in the United States, but it now has offices all around the globe. General Mills is

widely available in the United States, its major market in North America. The firm has also

extended its scope to serve customers in foreign markets such as the Canadian market, the

European market, the Asian market, the Latin American market, and the Australian market.

a) Company History

General Mills began its long and famous existence in Minneapolis, Minnesota in 1866. The

company has come a long way from its humble beginnings as a fine flour mill known simply as

the Washburn Crosby Company. Over time, the company expanded its product offerings and

acquired a number of rivals in the food manufacturing sector. In 1928, to reflect the company's

expanding product offering outside flour, it changed its name to General Mills.

One of General Mills' most pivotal moments was the 2001 acquisition of Pillsbury. Pillsbury,

Green Giant, and Haagen-Dazs are just a few of the well-known brands that joined the General

Mills family as a result of this acquisition. General Mills has become an industry powerhouse

because to strategic partnerships, acquisitions, and new product launches that have helped the

firm grow and diversify (Mahmud et al., 2021).

b) Organization

General Mills is governed by a decentralized organizational structure. Within the company, each

department is accountable for managing a certain line of merchandise. More efficient brand

management, faster decision making, and quicker adaptation to consumer and market trends are

all made possible by this organizational setup (Donaldson, 1990).

 c) Main Products and Services

In order to suit the needs and preferences of their diverse client base, General Mills offers a wide

variety of food products. Some of the company's most well-known brands include Cheerios,

Wheaties, Lucky Charms, Nature Valley, Yoplait, Betty Crocker, Progresso, Old El Paso, and

Annie's Homegrown. These businesses stock a wide variety of foods, including ready-to-eat

cereals, granola bars, yogurt, baking materials, chilled dough, snacks, and frozen entrees.

General Mills' primary source of revenue comes from the sale of its branded food goods. The

company markets and sells its wares via a wide range of retail, wholesale, and food service

channels (Taylor et al., 2005).

d) Geographic Area of Operations

General Mills is a global company with a presence in both domestic and international markets.

The company can be headquartered in the US, but it has operations in a wide variety of other

countries. General Mills has a sizable slice of the North American market, with the United States

being its primary focus. The company is now selling its wares all over the world, including in

Canada, Europe, the Asia-Pacific, Latin America, and Australia.

e) Recent Developments

With a Zacks Industry Rank of 44, the Food - Miscellaneous industry is in the top 18% of all

industries in terms of rankings. This implies that this industry has a comparative edge over

others. General Mills has seen recent developments that have produced a mixed picture overall.

The stock has declined over the last month while outperforming the market in the most recent

trading session. The forthcoming earnings report will provide further insight into the company's

financial performance, which might impact on the stock price. Investors can remain up to date on

General Mills' business prospects by monitoring analyst predictions and market developments.
The stock price and performance of General Mills, Inc. (GIS) have fluctuated, with the most

recent trading session closing at $81.32, marking a negligible 0.02 percent increase. General

Mills' stock performance has fallen behind both its industry and the market as a whole, although

exceeding the market. Analysts are now looking forward to General Mills' earnings report, which

is expected to be released on June 28, 2023, and which projects earnings of $1.05 per share and

predicted quarterly sales of $5.17 billion, a rise of 5.75 percent over the same time last year.

These expectations will have a significant impact on how the market reacts to General Mills'

performance (Research, 2023).

The company's future prospects, and present trends can be shown by changes in analyst

projections for General Mills. The Zacks Rank methodology rates companies from #1 (Strong

Buy) through #5 and considers positive estimate revisions to be beneficial for the company

(Strong Sell). The firm can be trading above the industry average of 17.88, according to General

Mills' predicted P/E ratio of 18.14. Additionally, its PEG ratio of 2.42 accounts for projected

profits growth.
 PART 2, FINANCIAL OVERVIEW

a. Sales and Income Record

2018 2019 2020 2021 2022

Total Revenue 15,740,400,000 16,865,200,000 17,626,600,000 18,127,000,000 18,992,800,000
(USD)
Percent - 7.14% 4.51% 2.84% 4.77%
Change in
Sales
Net Income 2,131,000,000 1,752,700,000 2,181,200,000 2,339,800,000 2,707,300,000
Available to
Common
Stockholders
(USD)
Percent - -17.56% 24.47% 7.29% 15.73%
Change in Net
Income

I. Graph Of Sales & Net Income, FY 2018 - 2022

20000000000
18992800000
17626600000 18127000000
16865200000
1500000000015740400000

10000000000

5000000000

2339800000 2707300000
2131000000 1752700000 2181200000

2018 2019 2020 2021 2022

Total Revenue Net Income

II. Comments: On Sales & Net Income

Revenue rose from $15.7 billion in 2018 to $18.9 billion in 2022. This period's
revenue CAGR is 4.51 percent. This shows the company's ability to grow revenue and

sales. Net income has changed. Net income peaked at $2.18 billion in 2020, dipped to

$1.75 billion in 2019, then returned to $2.71 billion in 2022. Net income fell 17.56

percent in 2019 and rose 24.47 percent in 2020. In 2021, growth was 7.29 percent, then

15.73 percent in 2022. Despite fluctuations, the company's profitability trend indicates a

continuous rise. The graph compares sales to net income. Sales typically increase net

income, whereas lower sales decrease it. Sales performance affects profitability. The

company's sales and net income increased significantly from 2021 to 2022. This positive

trend suggests that the firm utilized successful techniques to enhance sales and

profitability, resulting in great financial performance.

b. Expense Distribution

Expense Amount
Cost of Goods and Services 12,590,600,000
Selling, General and Administrative 3,147,000,000
Expenses
Total Net Finance Income/Expense 379,600,000
Interest Expense Net of Capitalized Interest 383,400,000
Provision for Income Tax 586,300,000
NonControlling/Minority Interests 27,700,000
 I. Pie Chart Of Expenses, FY 2022

Amount
3%
2% 0%
Cost of Goods and Services
2%
Selling, General and Admin-
istrative Expenses
Total Net Finance
Income/Expense
18% Interest Expense Net of Capi-
talized Interest
Provision for Income Tax
NonControlling/Minority In-
terests
74%

II. Comments: Comment on the company’s expense distribution.

The income statement highlights significant expenses. The $12,590,600,000 cost

of goods and services covers production and delivery. The corporation spent

$3,147,000,000 on selling, general, and administrative expenses. Interest income and

costs totaled $379,600,000. The company's interest expenses net of capitalized interest

were $383,400,000. The income tax allowance covered the company's $586,300,000

taxable income taxes. Non-controlling stockholders received $27,700,000 in net profits

from the company. These expenses affect the company's financial performance and

profitability.

c. Assets Distribution

Assets Amount

Cash $569,400,000
 Accounts receivable $1,692,100,000

Inventory $1,867,300,000

Fixed Assets $3,730,600,000

Other Assets $324,900,000

I. PIE CHART OF ASSETS, Year-End FY 2022

Chart Title

4% 7% Cash
Accounts receivable
21% Inventory
Fixed Assets
46% Other Assets

23%

II. Comments on Assets Distribution

The company's assets are divided into various categories, indicating its

investments to support operations and earn money. The company has liquidity and

flexibility with $569,400,000 in cash and cash equivalents. This sum should be assessed

against the company's financial needs and industry standards to ensure it is appropriate.

Customers owe $1,692,100,000. Monitor the collection timeframe and receivable quality

to preserve cash flows and decrease credit risk. Overstocking or obsolescence can affect
 profitability, thus managing the $1,867,300,000 inventory balance is crucial.

The company's $3,730,600,000 fixed assets boost long-term operations. Depreciation and

impairment expenses against gross fixed assets might reveal an asset's useful life and

maintenance requirements. The remaining $324,900,000 in assets—prepaid expenses,

intangible assets, and investments—should be assessed for their financial effect and

hazards.

c. Capital Structure

Capital Structure Amount

Current Liabilities $8,019,900,000

Long-term & Other $12,282,200,000

Liabilities

Preferred Stock (if any)

Common Equity $10,542,400,000

Debt Maturity Schedule Total $6,275,200,000

 a) Capital Structure Pie Chart, Year-End FY 2022

17% 22%
Current Liabilities
Long-term & Other Liabilities
Preferred Stock (if any)
Common Equity
28% Debt Maturity Schedule Total
33%

b) Comments: Comment On The Company’s Capital Structure.

Company's capital structure divides stock and debt finance. Shareholder

ownership is represented by $10,542,400,000 in common equity, which includes paid-in

capital, retained earnings, and cumulative comprehensive income/losses. A company's

capital structure affects its risk management, shareholder returns, and financial stability.

The company's debt commitments—$8,019,900,000 in current liabilities and

$12,282,200,000 in long-term & other liabilities—must be assessed. The company's

leverage and financial health depend on its debt levels, maturity schedule, interest

payments, and refinancing risks. Equity and debt should be balanced according to risk

tolerance, cost of capital, and industry requirements. By reviewing a company's capital

structure, investors can assess its ability to fund operations, weather economic downturns,

and grow while maximizing shareholder value.

PART 3, RATIO ANALYSIS:

a) LIQUIDITY:
FY 2021 FY 2022
Current Ratio:

GIS 0.6962 0.6346

Nestle 0.9809 0.8771

Quick Ratio:

GIS 0.3 0.4

Nestle 0.35 0.5

Comments On The Company’s Liquidity:

GIS and Nestle's current ratios, which measure a company's ability to meet immediate

obligations, decreased from FY 2021 to FY 2022. GIS's current ratio fell from 0.6962 to 0.6346,

indicating a little decrease in short-term debts. Nestle's current ratio fell from 0.9809 to 0.8771,

showing less short-term liquidity. These events can raise concerns about their urgent financial

obligations.

By excluding inventory from current assets, the fast ratio provides a more conservative

liquidity assessment. GIS and Nestle both have lower quick ratios in FY 2021 and FY 2022.

GIS's fast ratio increased from 0.3 to 0.4, improving its ability to satisfy short-term obligations

without relying on inventories. Nestle's quick ratio rose from 0.35 to 0.5 as its short-term

liquidity improved.

The fall in their current ratios from FY 2021 to FY 2022 suggests that GIS and Nestle's

liquidity was moderately affected. However, their improved fast ratios suggest companies can be

able to satisfy short-term commitments without utilizing inventory. Examine the businesses'

financial accounts and other factors to fully understand their liquidity status.
 b) ASSET MANAGEMENT
FY 2021 FY 2022
Total Asset Turnover:

GIS 0.5693 0.6109

Nestle 0.6286 0.7011

Average Collection Period:

GIS 24.0044 25.3522

Nestle 46.5482 42.808

Comments On The Company’s Asset Management:

We can evaluate GIS and Nestle's asset management using FY 2021 and FY 2022 total

asset turnover and average collection period data.

The total asset turnover ratio gauges a company's revenue generation efficiency. GIS and

Nestle improved their asset turnover percentages from FY 2021 to FY 2022. In FY 2022, GIS's

total asset turnover went from 0.5693 to 0.6109, suggesting greater revenue per dollar of assets.

Nestle's total asset turnover ratio grew from 0.6286 to 0.7011, indicating asset efficiency.

GIS's average collection period increased from 24.0044 to 25.3522 days between FY

2021 and FY 2022. Nestle's average collection duration dropped from 46.5482 to 42.808 days,

demonstrating more effective receivables collection.

GIS and Nestle improved asset management in FY 2022 compared to FY 2021. Increased

overall asset turnover ratios indicate improved asset revenue generation. Nestle's shorter average

collection duration suggests better receivables collection. These gains can indicate excellent asset

usage and management for both firms. To completely assess their asset management

performance, further analyses and aspects must be considered.

c) DEBT MANAGEMENT:
FY 2021 FY 2022
Total Debt to Total Assets:

GIS 0.6530 0.6741

Nestle 0.9174 0.6139

Times Interest Earned:

GIS 7.672 8.360

Nestle 14.185 18.512

Comments On The Company’s Debt Management:

GIS and Nestle's debt management can be assessed using their FY 2021 and FY 2022

total debt to total assets ratio and times interest earned numbers. A company's debt-to-asset ratio

shows how much debt it has. GIS and Nestle changed their debt management ratios between FY

2021 and FY 2022. GIS's ratio rose from 0.6530 to 0.6741, indicating a small rise in debt

financing. Nestle's ratio dropped from 0.9174 to 0.6139, showing a debt-to-asset decline.

The times interest earned ratio evaluates a company's capacity to pay interest with profits.

GIS and Nestle improved their times interest earned ratios from FY 2021 to FY 2022. GIS's

interest coverage ratio improved from 7.672 to 8.360. Nestle's ratio increased from 14.185 to

18.512, indicating a greater ability to pay interest.

GIS and Nestle debt management were mixed. GIS's debt-to-asset ratio increased

marginally, whereas Nestle's decreased significantly, indicating a lower debt load. Both

corporations increased their times interest earned ratios, indicating higher interest cost coverage.

To evaluate firms' debt management and financial health, more financial signs and elements are

needed.

d) PROFITABILITY:
FY 2021 FY 2022
Net profit Margin:

GIS 12.9078 14.2544

Nestle 19.3266 9.7805
Return on Assets:

GIS 7.3677 8.797

Nestle 12.358 7.098

Return on Equity:

GIS 24.0044 25.3522

Nestle 32.0063 22.4248

Modified Du Pont Equation, FY 2022:

GIS Nestle
Net Profit Margin 14.254 9.7805
Total Asset Turnover 0.6109 0.7011
Equity Multiplier 3.159 2.882

Comments On The Company’s Profitability:

We can assess GIS and Nestle's profitability using FY 2021 and FY 2022 net profit

margin, ROA, ROE, and modified Du Pont equation numbers.

Each dollar of sales generates a net profit margin. GIS and Nestle changed their net profit

margins between FY 2021 and FY 2022. GIS's net profit margin grew from 12.9078 percent to

14.2544 percent. Nestle's net profit margin fell from 19.3266 percent to 9.7805 percent,

indicating lower profitability.

ROA evaluates a company's asset efficiency. GIS and Nestle improved ROA from FY

2021 to FY 22. GIS's ROA rose from 7.3677 to 8.797 percent, demonstrating improved asset use

and profitability. Nestle's ROA improved from 12.358 percent to 7.098 percent.

ROE measures shareholder equity returns per dollar. GIS and Nestle have different ROE

patterns from FY 2021 and FY 2022. GIS's ROE rose from 24.0044 to 25.3522 percent. Nestle's

ROE fell from 32.0063 to 22.4248 percent.

The modified Du Pont equation evaluates corporate profitability using net profit margin,
total asset turnover, and equity multiplier. GIS and Nestle have distinct profit drivers in FY 2022.

GIS had 14.254 net profit margin, 0.6109 total asset turnover, and 3.159 equity multiplier. Nestle

had 9.7805 net profit margin, 0.7011 total asset turnover, and 2.882 equity multiplier.

GIS and Nestle profited unevenly. GIS increased net profit margin, ROA, and ROE,

suggesting profitability and effective asset usage. Nestle's net profit margin and ROE fell,

indicating lower profitability. To understand firms' profitability and financial success, examine

other financial indicators and determinants.

e) MARKET VALUE RATIOS:

FY 2021 FY 2022
PE Ratio:

GIS 16.32 17.59

Nestle 24.00 30.10

Market to Book Ratio:

GIS 3.65 4.79

Nestle 6.71 6.88

Comments On The Company’s Market Value Ratios:

We can estimate GIS and Nestle's market value ratios using their FY 2021 and FY 2022

PE and market-to-book ratios. A company's profits are valued by the market's PE ratio. GIS and

Nestle changed their PE ratios between FY 2021 and FY 2022. GIS's PE ratio rose from 16.32 to

17.59, suggesting the market's greater earnings valuation. Nestle's PE ratio rose from 24.00 to

30.10, indicating a greater earnings value.

The market-to-book ratio compares a company's market value to its book value—assets

minus liabilities. The market-to-book ratio shows the market's willingness to pay compared to

the company's net asset worth. GIS and Nestle changed their market-to-book ratios between FY
2021 and FY 2022. The market's readiness to pay over GIS's net asset value climbed from 3.65

to 4.79, according to its market-to-book ratio. Nestle's market-to-book ratio stayed at 6.71 to

6.88.

Market value ratios show how GIS and Nestle are valued and expected to grow. Both

firms' PE ratios increased due to optimistic market sentiment, growth forecasts, or great financial

performance. Investors are ready to pay more for the firm’s assets than their book value, showing

good market sentiment and confidence in their future prospects.

To evaluate a company's market valuation and investor mood, examine these market

value ratios together with other financial indications and determinants. Market value ratios

should be viewed in the context of financial performance and industry landscape. External

variables and market dynamics might affect them.

References

Donaldson, G. (1990). Voluntary restructuring: the case of General Mills. Journal of Financial
Economics, 27(1), 117-141.
Mahmud, A., Ding, D., & Hasan, M. M. (2021). Corporate social responsibility: Business
responses to coronavirus (COVID-19) pandemic. SAGE open, 11(1), 2158244020988710.
Research, Z. E. (2023). General Mills (GIS) Gains As Market Dips: What You Should Know.
https://finance.yahoo.com/news/general-mills-gis-gains-market-220024692.html
Taylor, M. R., Brester, G. W., & Boland, M. A. (2005). Hard white wheat and gold medal flour:
General Mills' contracting program. Applied Economic Perspectives and Policy, 27(1),
117-129.
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