Inventories are stated at the lower of cost or market. Kraft Foods Inc. values all inventories using the average cost method. Kraft Foods Inc. also records inventory allowances for overstocked and obsolete inventories due to ingredient and packaging changes.
Source: Kraft Foods Inc., Annual Report
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Kraft Foods Inc., Statement of Financial Position, Inventory
USD $ in millions
| Dec 31, 2011 | Dec 31, 2010 | Dec 31, 2009 | Dec 31, 2008 | Dec 31, 2007 | ||
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Raw materials | |
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Finished product | |
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LIFO reserve | |
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Inventories, net | |
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Source: Based on data from Kraft Foods Inc. Annual Reports
| Item | Description | The company |
|---|---|---|
| Raw materials | Carrying amount as of the balance sheet date of unprocessed items to be consumed in the manufacturing or production process. Also includes purchased parts that will be used as components of a finished product. | Kraft Foods Inc.'s raw materials increased from 2009 to 2010 and from 2010 to 2011. |
| Finished product | Carrying amount as of the balance sheet date of merchandise or goods held by the company that are readily available for sale. | Kraft Foods Inc.'s finished product increased from 2009 to 2010 and from 2010 to 2011. |
| Inventories, net | Carrying amount (lower of cost or market) as of the balance sheet date of inventories less all valuation and other allowances. Excludes noncurrent inventory balances (expected to remain on hand past one year or one operating cycle, if longer). | Kraft Foods Inc.'s inventories, net increased from 2009 to 2010 and from 2010 to 2011. |
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Adjusting LIFO Inventory to FIFO (Current) Cost
USD $ in millions
| Dec 31, 2011 | Dec 31, 2010 | Dec 31, 2009 | Dec 31, 2008 | Dec 31, 2007 | ||
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| Adjustment to Inventories, Net | ||||||
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Inventories, net at LIFO (as reported) | |
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Add: LIFO reserve, ending balance | |
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Inventories, net at FIFO (adjusted) | |
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| Adjustment to Current Assets | ||||||
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Current assets (as reported) | |
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Add: LIFO reserve, ending balance | |
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Current assets (adjusted) | |
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| Adjustment to Total Assets | ||||||
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Total assets (as reported) | |
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Add: LIFO reserve, ending balance | |
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Total assets (adjusted) | |
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| Adjustment to Kraft Foods Shareholders’ Equity | ||||||
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Kraft Foods shareholders’ equity (as reported) | |
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Add: LIFO reserve, ending balance | |
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Kraft Foods shareholders’ equity (adjusted) | |
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| Adjustment to Net Earnings Attributable To Kraft Foods | ||||||
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Net earnings attributable to Kraft Foods (as reported) | |
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Add: Increase (decrease) in LIFO reserve, ending balance | |
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Net earnings attributable to Kraft Foods (adjusted) | |
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Kraft Foods Inc.'s inventory value on Dec 31, 2011 would be $5,706 (in millions) if the FIFO inventory method was used instead of LIFO. Kraft Foods Inc.'s inventories, valued on a LIFO basis, on Dec 31, 2011 were $5,706 . Kraft Foods Inc.'s inventories would have been $– higher than reported on Dec 31, 2011 if the FIFO method had been used instead.
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Kraft Foods Inc., adjusted ratios
| Dec 31, 2011 | Dec 31, 2010 | Dec 31, 2009 | Dec 31, 2008 | Dec 31, 2007 | ||
|---|---|---|---|---|---|---|
| Current Ratio | ||||||
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Reported current ratio (LIFO) | |
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Adjusted current ratio (FIFO) | |
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| Net Profit Margin | ||||||
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Reported net profit margin (LIFO) | % |
% |
% |
% |
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Adjusted net profit margin (FIFO) | % |
% |
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| Total Asset Turnover | ||||||
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Reported total asset turnover (LIFO) | |
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Adjusted total asset turnover (FIFO) | |
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| Financial Leverage | ||||||
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Reported financial leverage (LIFO) | |
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Adjusted financial leverage (FIFO) | |
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| Return on Equity (ROE) | ||||||
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Reported ROE (LIFO) | % |
% |
% |
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Adjusted ROE (FIFO) | % |
% |
% |
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| Return on Assets (ROA) | ||||||
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Reported ROA (LIFO) | % |
% |
% |
% |
% |
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Adjusted ROA (FIFO) | % |
% |
% |
% |
% |
| Ratio | Description | The company |
|---|---|---|
| Adjusted current ratio | A liquidity ratio calculated as adjusted current assets divided by current liabilities. | Kraft Foods Inc.'s adjusted current ratio deteriorated from 2009 to 2010 and from 2010 to 2011. |
| Adjusted net profit margin | An indicator of profitability, calculated as adjusted net income divided by revenue. | Kraft Foods Inc.'s adjusted net profit margin improved from 2009 to 2010 but then deteriorated significantly from 2010 to 2011. |
| Adjusted total asset turnover | An activity ratio calculated as total revenue divided by adjusted total assets. | Kraft Foods Inc.'s adjusted total asset turnover deteriorated from 2009 to 2010 but then improved from 2010 to 2011 not reaching 2009 level. |
| Adjusted financial leverage | A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income. |
Kraft Foods Inc.'s adjusted financial leverage increased from 2009 to 2010 and from 2010 to 2011. |
| Adjusted ROE | A profitability ratio calculated as adjusted net income divided by adjusted shareholders' equity. | Kraft Foods Inc.'s adjusted ROE deteriorated from 2009 to 2010 and from 2010 to 2011. |
| Adjusted ROA | A profitability ratio calculated as adjusted net income divided by adjusted total assets. | Kraft Foods Inc.'s adjusted ROA deteriorated from 2009 to 2010 and from 2010 to 2011. |
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| Dec 31, 2011 | Dec 31, 2010 | Dec 31, 2009 | Dec 31, 2008 | Dec 31, 2007 | ||
|---|---|---|---|---|---|---|
| As Reported | ||||||
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Current assets (USD $ in millions) | |
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Current liabilities (USD $ in millions) | |
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Current ratio1 | |
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| Adjusted: from LIFO to FIFO | ||||||
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Adjusted current assets (USD $ in millions) | |
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Current liabilities (USD $ in millions) | |
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Adjusted current ratio2 | |
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2011 Calculations
1 Current ratio = Current assets ÷ Current liabilities
= ÷ =
2 Adjusted current ratio = Adjusted current assets ÷ Current liabilities
= ÷ =
| Ratio | Description | The company |
|---|---|---|
| Adjusted current ratio | A liquidity ratio calculated as adjusted current assets divided by current liabilities. | Kraft Foods Inc.'s adjusted current ratio deteriorated from 2009 to 2010 and from 2010 to 2011. |
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| Dec 31, 2011 | Dec 31, 2010 | Dec 31, 2009 | Dec 31, 2008 | Dec 31, 2007 | ||
|---|---|---|---|---|---|---|
| As Reported | ||||||
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Net earnings attributable to Kraft Foods (USD $ in millions) | |
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Net revenues (USD $ in millions) | |
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Net profit margin1 | % |
% |
% |
% |
% |
| Adjusted: from LIFO to FIFO | ||||||
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Adjusted net earnings attributable to Kraft Foods (USD $ in millions) | |
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Net revenues (USD $ in millions) | |
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Adjusted net profit margin2 | % |
% |
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2011 Calculations
1 Net profit margin = 100 × Net earnings attributable to Kraft Foods ÷ Net revenues
= 100 × ÷ = %
2 Adjusted net profit margin = 100 × Adjusted net earnings attributable to Kraft Foods ÷ Net revenues
= 100 × ÷ = %
| Ratio | Description | The company |
|---|---|---|
| Adjusted net profit margin | An indicator of profitability, calculated as adjusted net income divided by revenue. | Kraft Foods Inc.'s adjusted net profit margin improved from 2009 to 2010 but then deteriorated significantly from 2010 to 2011. |
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| Dec 31, 2011 | Dec 31, 2010 | Dec 31, 2009 | Dec 31, 2008 | Dec 31, 2007 | ||
|---|---|---|---|---|---|---|
| As Reported | ||||||
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Net revenues (USD $ in millions) | |
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Total assets (USD $ in millions) | |
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Total asset turnover1 | |
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| Adjusted: from LIFO to FIFO | ||||||
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Net revenues (USD $ in millions) | |
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Adjusted total assets (USD $ in millions) | |
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Adjusted total asset turnover2 | |
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2011 Calculations
1 Total asset turnover = Net revenues ÷ Total assets
= ÷ =
2 Adjusted total asset turnover = Net revenues ÷ Adjusted total assets
= ÷ =
| Ratio | Description | The company |
|---|---|---|
| Adjusted total asset turnover | An activity ratio calculated as total revenue divided by adjusted total assets. | Kraft Foods Inc.'s adjusted total asset turnover deteriorated from 2009 to 2010 but then improved from 2010 to 2011 not reaching 2009 level. |
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| Dec 31, 2011 | Dec 31, 2010 | Dec 31, 2009 | Dec 31, 2008 | Dec 31, 2007 | ||
|---|---|---|---|---|---|---|
| As Reported | ||||||
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Total assets (USD $ in millions) | |
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Kraft Foods shareholders’ equity (USD $ in millions) | |
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Financial leverage1 | |
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| Adjusted: from LIFO to FIFO | ||||||
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Adjusted total assets (USD $ in millions) | |
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Adjusted kraft Foods shareholders’ equity (USD $ in millions) | |
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Adjusted financial leverage2 | |
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2011 Calculations
1 Financial leverage = Total assets ÷ Kraft Foods shareholders’ equity
= ÷ =
2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted kraft Foods shareholders’ equity
= ÷ =
| Ratio | Description | The company |
|---|---|---|
| Adjusted financial leverage | A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income. |
Kraft Foods Inc.'s adjusted financial leverage increased from 2009 to 2010 and from 2010 to 2011. |
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| Dec 31, 2011 | Dec 31, 2010 | Dec 31, 2009 | Dec 31, 2008 | Dec 31, 2007 | ||
|---|---|---|---|---|---|---|
| As Reported | ||||||
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Net earnings attributable to Kraft Foods (USD $ in millions) | |
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Kraft Foods shareholders’ equity (USD $ in millions) | |
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ROE1 | % |
% |
% |
% |
% |
| Adjusted: from LIFO to FIFO | ||||||
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Adjusted net earnings attributable to Kraft Foods (USD $ in millions) | |
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Adjusted kraft Foods shareholders’ equity (USD $ in millions) | |
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Adjusted ROE2 | % |
% |
% |
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2011 Calculations
1 ROE = 100 × Net earnings attributable to Kraft Foods ÷ Kraft Foods shareholders’ equity
= 100 × ÷ = %
2 Adjusted ROE = 100 × Adjusted net earnings attributable to Kraft Foods ÷ Adjusted kraft Foods shareholders’ equity
= 100 × ÷ = %
| Ratio | Description | The company |
|---|---|---|
| Adjusted ROE | A profitability ratio calculated as adjusted net income divided by adjusted shareholders' equity. | Kraft Foods Inc.'s adjusted ROE deteriorated from 2009 to 2010 and from 2010 to 2011. |
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| Dec 31, 2011 | Dec 31, 2010 | Dec 31, 2009 | Dec 31, 2008 | Dec 31, 2007 | ||
|---|---|---|---|---|---|---|
| As Reported | ||||||
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Net earnings attributable to Kraft Foods (USD $ in millions) | |
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Total assets (USD $ in millions) | |
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ROA1 | % |
% |
% |
% |
% |
| Adjusted: from LIFO to FIFO | ||||||
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Adjusted net earnings attributable to Kraft Foods (USD $ in millions) | |
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Adjusted total assets (USD $ in millions) | |
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Adjusted ROA2 | % |
% |
% |
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2011 Calculations
1 ROA = 100 × Net earnings attributable to Kraft Foods ÷ Total assets
= 100 × ÷ = %
2 Adjusted ROA = 100 × Adjusted net earnings attributable to Kraft Foods ÷ Adjusted total assets
= 100 × ÷ = %
| Ratio | Description | The company |
|---|---|---|
| Adjusted ROA | A profitability ratio calculated as adjusted net income divided by adjusted total assets. | Kraft Foods Inc.'s adjusted ROA deteriorated from 2009 to 2010 and from 2010 to 2011. |
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