Question

Formulating Financial Statements from Raw Data
Following is selected financial information from General Mills, Inc., for its fiscal year ended May 29, 2011 ($ millions):

Revenue	$ 14,880.2
Cash from operating activities	1,526.8
Cash, beginning year	673.2
Stockholders' equity	6,612.2
Noncash assets	18,054.9
Cash from financing activities*	(865.3)
Cost of goods sold	8,926.7
Total expenses (other than cost of goods sold)	4,155.2
Cash, ending year	619.6
Total liabilities	12,062.3
Cash from investing activities	(715.1)

*Cash from financing activities includes the effects of foreign exchange rate fluctuations.

(a) Prepare the income statement, the balance sheet, and the statement of cash flows for General Mills for the fiscal year ended May 2011.

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 29, 2011
Revenue	$Answer
AnswerCash, ending yearTotal expensesCost of goods soldNoncash assets	Answer
Gross profit	Answer
AnswerCash, ending yearTotal expensesCost of goods soldNoncash assets	Answer
Net income	$Answer

General Mills, Inc. Balance Sheet ($ millions) May 29, 2011
Assets		Liabilities
Cash	$Answer	Total liabilities	$Answer
AnswerCash, beginning yearNoncash assetsStockholders' equityNet income	Answer	AnswerCash, beginning yearNoncash assetsStockholders' equityNet income	Answer
Total assets	$Answer	Total liabilities and equity	$Answer

General Mills, Inc. Statement of Cash Flows ($ millions) For Year Ended May 29, 2011
Cash from operating activities	$Answer
AnswerNoncash assetsNet incomeCash, beginning yearCash from investing activities	Answer
Cash from financing activities	Answer
Net change in cash	Answer
AnswerNoncash assetsNet incomeCash, beginning yearCash from investing activities	Answer
Cash, ending year	$Answer

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

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 all 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