Question

Formulating Financial Statements from Raw Data
Following is selected financial information from General Mills, Inc., for its fiscal year ended May 25, 2003 ($ millions):

Revenue	$10,506
Cash from operating activities	1,631
Cash, beginning year	975
Stockholders' equity	4,475
Noncash assets	17,524
Cash from financing activities	(885)
Cost of goods sold	6,109
Total expenses (other than cost of goods sold)	3,480
Cash, ending year	703
Total liabilities	13,752
Cash from investing activities	(1,018)

Prepare the income statement, the balance sheet, and the statement of cash flows for General Mills for the fiscal year ended May 2003.

Hint: Enter negative numbers only for answers in the statement of cash flows (if applicable).

General Mills, Inc.

Income Statement ($ millions)

For Year Ended May 25, 2003

Revenue	$0
Cash, ending year, total expenses, cost of goods sold, noncash assets	0
Gross Profit	0
Cash, ending year, total expenses, cost of goods sold, noncash assets	0
Net Income	0

General Mills, Inc.

Balance Sheet ($ millions)

May 25, 2003

assets Liabilities

cash	$0	Total Liailities	$0
cash, beginning year, non cash assets, stock holders equity, net income	0	cash, beginning year, non cash assets, stock holders equity, net income	0
Total assets	$0	Total liabilities and equity	$0

General Mills, Inc.

Statement of Cash Flows ($ millions)

For Year Ended May 25, 2003

Cash from operating activities	$0
Non cash assets, net income, cash, beginning year, cash from investing activities	0
Cash from financing activities	0
Net change in cash	0
Non cash assets, net income, cash, beginning year, cash from investing activities	0
Cash, ending year	$0

Does the negative amount for cash from financing activities concern us? Explain. (select)

A negative amount for cash from financing activities implies that the company is unable to pay its debts as they come due and should be interpreted negatively.

A negative amount for cash from financing activities is the result of additional borrowings. Because the additional funds are invested in earnings-generating assets, this should be viewed positively.

A negative amount for cash from financing activities implies that the market value of the company's long-term debt has declined and this change should be viewed negatively.

A negative amount for cash from financing activities reflects the reduction of long-term debt, which is a positive sign of the company’s ability to retire debt obligations.

(c) Using the statements prepared for part a. compute the following ratios (for this part only, use the year-end balance instead of the average for assets and stockholders' equity):

Round answers to two decimal places (example for percentage answers: 0.12345 = 12.35%).

(i) Profit margin
Answer%
(ii) Asset turnover
Answer
(iii) Return on assets
Answer%
(iv) Return on equity
Answer%

Answer 1