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General Mills Inc. pages available for free this week:
- Balance Sheet: Liabilities and Stockholders’ Equity
- Common-Size Income Statement
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Enterprise Value (EV)
- Price to FCFE (P/FCFE)
- Present Value of Free Cash Flow to Equity (FCFE)
- Operating Profit Margin since 2005
- Current Ratio since 2005
- Debt to Equity since 2005
- Total Asset Turnover since 2005
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Goodwill and Intangible Asset Disclosure
Based on: 10-K (reporting date: 2019-05-26), 10-K (reporting date: 2018-05-27), 10-K (reporting date: 2017-05-28), 10-K (reporting date: 2016-05-29), 10-K (reporting date: 2015-05-31), 10-K (reporting date: 2014-05-25).
The analysis of the financial data over the six-year period reveals several notable trends regarding intangible assets and goodwill.
- Goodwill
- Goodwill remained relatively stable from 2014 to 2017, fluctuating modestly around 8.7 to 8.9 billion USD. A significant increase occurred in 2018, rising sharply to approximately 14.07 billion USD, which then slightly decreased but remained near that elevated level in 2019.
- Brands and Other Indefinite-Lived Intangibles
- This category experienced a gradual decline from 4.5 billion USD in 2014 to about 4.15 billion USD in 2016 and 2017. A marked increase is noticeable in 2018, reaching nearly 6.82 billion USD. The value slightly decreased in 2019 but remained substantially higher than the pre-2018 levels.
- Intangible Assets Not Subject to Amortization
- These intangible assets followed the same pattern as the brands and other indefinite-lived intangibles, reflecting identical values across all periods. This suggests these assets are primarily included within the indefinite-lived intangibles category, showing stability followed by a sharp increase in 2018 and a minor reduction in 2019.
- Franchise Agreements, Customer Relationships, and Other Finite-Lived Intangibles
- Values in this category showed a declining trend from 630.7 million USD in 2014 to 524.8 million USD in 2017. However, there was a significant increase in 2018, rising to over 811 million USD, followed by a slight decrease in 2019.
- Accumulated Amortization
- Accumulated amortization of intangible assets increased in absolute terms (negative values) consistently over the period, reflecting ongoing amortization expenses. The balance grew from -120.5 million USD in 2014 to -210.1 million USD in 2019, indicating systematic allocation of amortization costs over time.
- Intangible Assets Subject to Amortization
- These assets showed a decreasing trend from 510.2 million USD in 2014 down to 369.3 million USD in 2017. A substantial increase occurred in 2018, reaching 626.4 million USD, but this figure subsided to 576 million USD in 2019. This suggests both asset additions and amortization impacts during the period.
- Other Intangible Assets
- This broader category largely followed the same trend as intangible assets subject to amortization, starting at 5 billion USD in 2014, decreasing to about 4.53 billion USD by 2016-2017, and then sharply increasing to over 7.4 billion USD in 2018 before a slight decline in 2019.
- Goodwill and Other Intangible Assets Total
- The total of goodwill and other intangible assets combined was relatively stable from 2014 through 2017, hovering around 13.2 to 13.7 billion USD. A significant surge to over 21.5 billion USD occurred in 2018, with a minor decrease in 2019. This overall increase primarily stems from rises in goodwill and indefinite-lived intangibles.
Overall, 2018 stands out as a pivotal year with substantial increases in goodwill, indefinite-lived intangibles, and amortizable intangible assets, suggesting major acquisitions or revaluations took place during that period. Prior to 2018, intangible assets and goodwill showed relatively stable or slightly declining patterns. Amortization expenses steadily increased, reflecting ongoing utilization of finite-lived intangible assets.
Adjustments to Financial Statements: Removal of Goodwill
Based on: 10-K (reporting date: 2019-05-26), 10-K (reporting date: 2018-05-27), 10-K (reporting date: 2017-05-28), 10-K (reporting date: 2016-05-29), 10-K (reporting date: 2015-05-31), 10-K (reporting date: 2014-05-25).
- Total Assets
- The reported total assets remained relatively stable from 2014 to 2017, fluctuating slightly between approximately 21.7 billion and 23.1 billion USD. A significant uptick is observed in 2018 with reported assets rising sharply to over 30.6 billion USD, followed by a slight decrease in 2019 to about 30.1 billion USD.
- Conversely, the adjusted total assets, which presumably exclude goodwill, show a different pattern. These decreased steadily from approximately 14.5 billion USD in 2014 to around 13.1 billion USD in 2015, remaining relatively flat through 2017. A marked increase occurs in 2018, raising adjusted assets to about 16.6 billion USD, before slightly declining to 16.1 billion USD in 2019. This indicates that the increase in reported total assets in 2018 is partially reflected in the adjusted figures but at a lower magnitude.
- Stockholders’ Equity
- The reported stockholders’ equity shows a declining trend from 6.5 billion USD in 2014 to approximately 4.3 billion USD in 2017. This is followed by a recovery beginning in 2018, rising significantly to over 6.1 billion USD and reaching about 7.1 billion USD in 2019. This recovery is notable and suggests an improvement in the company’s net worth based on reported values.
- In sharp contrast, the adjusted stockholders’ equity figures are negative across all years, indicating that when goodwill is excluded, the company’s equity position is significantly weaker. The adjusted equity deteriorates further from a negative 2.1 billion USD in 2014 to a negative 4.4 billion USD in 2017, and then worsens substantially to nearly negative 7.9 billion USD in 2018. A slight improvement is seen in 2019, but equity remains deeply negative at approximately negative 6.9 billion USD. This suggests that goodwill constitutes a substantial portion of reported equity, and without it, equity base is not only negative but also trending downward before slight stabilization.
- Overall Insights
- The divergence between reported and adjusted figures underscores the significant impact of goodwill on the company's balance sheet. The substantial increase in reported assets and equity in 2018 is mirrored, but to a lesser degree, in the adjusted assets while adjusted equity continues to reflect a weak financial position. This discrepancy suggests that the company’s intangible assets, particularly goodwill, heavily influence reported financial health.
- The negative trend in adjusted stockholders’ equity raises concerns about the underlying asset quality and the sustainability of the equity position without the inclusion of goodwill. The improvement in reported equity from 2018 onward should be interpreted cautiously given the persistent negative adjusted equity figures.
General Mills Inc., Financial Data: Reported vs. Adjusted
Adjusted Financial Ratios: Removal of Goodwill (Summary)
Based on: 10-K (reporting date: 2019-05-26), 10-K (reporting date: 2018-05-27), 10-K (reporting date: 2017-05-28), 10-K (reporting date: 2016-05-29), 10-K (reporting date: 2015-05-31), 10-K (reporting date: 2014-05-25).
- Total Asset Turnover
- The reported total asset turnover shows a declining trend from 0.77 in 2014 to a low of 0.51 in 2018, followed by a slight recovery to 0.56 in 2019. In contrast, the adjusted total asset turnover starts significantly higher at 1.24 in 2014 and follows a similar declining pattern to a low of 0.95 in 2018, then modestly recovers to 1.05 in 2019. The adjusted figures consistently exceed the reported ones, suggesting that goodwill adjustments reveal more efficient asset utilization than the reported data indicates.
- Financial Leverage
- The reported financial leverage increased from 3.54 in 2014 to a peak of 5.04 in 2017, before declining to 4.27 by 2019. This pattern suggests rising reliance on debt or other liabilities up to 2017, with a partial deleveraging or stabilization in subsequent years. There are no adjusted financial leverage figures available for comparison.
- Return on Equity (ROE)
- The reported ROE demonstrates volatility, starting at 27.92% in 2014, decreasing to 24.44% in 2015, then peaking at 38.3% in 2017 before trending downward to 24.85% in 2019. This fluctuation indicates varying profitability and efficiency in generating returns on equity across the period, with the highest performance in 2017. No adjusted ROE data is provided.
- Return on Assets (ROA)
- The reported ROA declines from 7.88% in 2014 to 5.82% in 2019, exhibiting a gentle downward trend with some minor fluctuations. The adjusted ROA, which excludes the impact of goodwill, is consistently higher, starting at 12.59% in 2014 and ending at 10.88% in 2019. Despite both declining over time, the adjusted ROA remains substantially better, implying that goodwill adjustments highlight stronger asset profitability than reported figures suggest.
- Overall Observations
- The data illustrates a general decline in asset turnover and profitability ratios over the period analyzed, whether reported or adjusted, although adjusted figures are consistently more favorable. Financial leverage initially increases but shows signs of reduction after 2017. The patterns suggest challenges in maintaining operational efficiency and profitability, with adjustments for goodwill revealing more optimistic underlying performance metrics compared to reported data.
General Mills Inc., Financial Ratios: Reported vs. Adjusted
Adjusted Total Asset Turnover
Based on: 10-K (reporting date: 2019-05-26), 10-K (reporting date: 2018-05-27), 10-K (reporting date: 2017-05-28), 10-K (reporting date: 2016-05-29), 10-K (reporting date: 2015-05-31), 10-K (reporting date: 2014-05-25).
2019 Calculations
1 Total asset turnover = Net sales ÷ Total assets
= ÷ =
2 Adjusted total asset turnover = Net sales ÷ Adjusted total assets
= ÷ =
The data indicates notable shifts in both reported and adjusted total assets over the years. Reported total assets showed a general decline from 23,145,700 thousand US dollars in 2014 to 21,712,300 thousand in 2016, followed by a slight increase to 21,812,600 thousand in 2017. A significant jump occurred in 2018, reaching 30,624,000 thousand, with a minor decrease to 30,111,200 thousand in 2019. In contrast, adjusted total assets, which exclude goodwill, followed a similar downward trajectory from 14,495,200 thousand in 2014 to 12,971,100 thousand in 2016, then a modest rise to 13,065,400 thousand in 2017, and a substantial increase to 16,559,000 thousand in 2018 before slightly falling to 16,115,400 thousand in 2019.
Regarding asset efficiency, the reported total asset turnover ratio started at 0.77 in 2014 and peaked at 0.8 in 2015. Thereafter, it showed a continuous downward trend to 0.72 by 2017, and then a sharp decline to 0.51 in 2018. A slight recovery to 0.56 was observed in 2019. The adjusted total asset turnover ratio also reflected a similar trajectory but at higher levels, beginning at 1.24 in 2014, peaking at 1.35 in 2015, and gradually declining to 1.2 in 2017. A marked drop to 0.95 in 2018 was followed by a moderate rebound to 1.05 in 2019.
Overall, the significant increase in asset base in 2018, observed in both reported and adjusted figures, corresponds with a steep decline in asset turnover ratios, indicating potential challenges in generating revenue relative to asset growth during that year. The partial recovery in the turnover ratios by 2019, despite a slight reduction in asset values, suggests some improvement in asset utilization efficiency. The difference between reported and adjusted figures emphasizes the impact of goodwill on asset measures, with adjusted ratios consistently higher, reflecting the exclusion of intangible assets from the efficiency calculations.
Adjusted Financial Leverage
Based on: 10-K (reporting date: 2019-05-26), 10-K (reporting date: 2018-05-27), 10-K (reporting date: 2017-05-28), 10-K (reporting date: 2016-05-29), 10-K (reporting date: 2015-05-31), 10-K (reporting date: 2014-05-25).
2019 Calculations
1 Financial leverage = Total assets ÷ Stockholders’ equity
= ÷ =
2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted stockholders’ equity
= ÷ =
The analysis of the financial data reveals several notable trends in the reported and goodwill adjusted figures over the six-year period.
- Total Assets
- The reported total assets show a fluctuating pattern with a decline from 23,145,700 thousand USD in 2014 to 21,712,300 thousand USD in 2016, followed by stabilization around 21,800,000 thousand USD in 2017. A significant increase occurs in 2018, reaching 30,624,000 thousand USD, before a slight decrease to 30,111,200 thousand USD in 2019. The adjusted total assets exhibit a similar trend but at consistently lower levels, reflecting the exclusion of goodwill. The adjusted assets decline gradually from 14,495,200 thousand USD in 2014 to 12,971,100 thousand USD in 2016, then rise significantly in 2018 to 16,559,000 thousand USD, followed by a slight reduction to 16,115,400 thousand USD in 2019.
- Stockholders’ Equity
- Reported stockholders’ equity demonstrates a downward trend from 6,534,800 thousand USD in 2014 to 4,327,900 thousand USD in 2017, before recovering sharply to 6,141,100 thousand USD in 2018 and further increasing to 7,054,500 thousand USD in 2019. In contrast, the adjusted stockholders’ equity, which accounts for goodwill adjustments, remains negative throughout the observed period. It worsens from -2,115,700 thousand USD in 2014 to -7,923,900 thousand USD in 2018, improving slightly to -6,941,300 thousand USD in 2019, indicating that goodwill adjustments substantially affect the company's net equity position.
- Financial Leverage
- The reported financial leverage ratio indicates an increasing leverage trend from 3.54 in 2014 to 5.04 in 2017, implying higher debt relative to equity. A mild decline follows, with leverage decreasing to 4.27 by 2019. Data for adjusted financial leverage is not provided, preventing a deeper analysis of leverage excluding goodwill.
Overall, the data suggests that goodwill has a significant impact on the balance sheet, particularly reducing equity and total assets when adjusted. The reported figures show improvement in equity and total assets after 2017, while adjusted equity remains negative, signaling potential concerns about asset quality or impairment. The financial leverage trend indicates rising leverage until 2017, followed by a moderate deleveraging phase. The absence of adjusted leverage data limits the ability to fully assess leverage risks excluding goodwill effects.
Adjusted Return on Equity (ROE)
Based on: 10-K (reporting date: 2019-05-26), 10-K (reporting date: 2018-05-27), 10-K (reporting date: 2017-05-28), 10-K (reporting date: 2016-05-29), 10-K (reporting date: 2015-05-31), 10-K (reporting date: 2014-05-25).
2019 Calculations
1 ROE = 100 × Net earnings attributable to General Mills ÷ Stockholders’ equity
= 100 × ÷ =
2 Adjusted ROE = 100 × Net earnings attributable to General Mills ÷ Adjusted stockholders’ equity
= 100 × ÷ =
- Stockholders’ Equity Trends
- The reported stockholders’ equity exhibits significant fluctuations over the six-year period. Starting at approximately 6.53 billion USD in May 2014, it declined notably to about 4.99 billion USD in May 2015 and further decreased slightly to 4.93 billion USD in May 2016. This downward trajectory continued into May 2017 with the lowest point at around 4.33 billion USD. However, from May 2017 onwards, there was a notable recovery, with equity rising sharply to approximately 6.14 billion USD in May 2018 and further increasing to roughly 7.05 billion USD by May 2019.
- Adjusted Stockholders’ Equity Trends
- In contrast, the adjusted stockholders’ equity presents a consistently negative and worsening trend throughout the period. The adjustments start at approximately -2.12 billion USD in May 2014, deepening to around -3.88 billion USD in May 2015, and remain substantially negative thereafter. There is a slight improvement in May 2016 to near -3.81 billion USD, but this is followed by a further decline to nearly -4.42 billion USD by May 2017 and a steep drop to about -7.92 billion USD in May 2018. While the figure improves somewhat in May 2019 to approximately -6.94 billion USD, it remains significantly below zero, indicating persistent negative adjustments to equity.
- Return on Equity (ROE) Analysis
- The reported ROE shows variability with an overall high level but a downward shift towards the end of the period. The ROE started at nearly 27.92% in May 2014, decreased to 24.44% by May 2015, then saw a strong increase to 34.43% in May 2016 and peaked at 38.3% in May 2017. After this peak, there was a decline to 34.7% in May 2018, followed by a more pronounced reduction to 24.85% by May 2019. The absence of data for adjusted ROE precludes further comparison; however, the reported figures suggest fluctuating profitability in relation to reported equity.
- Summary of Insights
- The disparities between reported and adjusted stockholders’ equity suggest that significant goodwill or other intangible asset adjustments negatively impact the equity base. While reported equity and ROE indicate a recovery phase beginning in 2017 and strong profitability measures, adjusted equity metrics highlight a contrasting view with continued underlying weaknesses. The negative adjusted equity points to potentially impaired asset values or other adjustments not reflected in the reported equity, impacting the financial health assessment. The notable decrease in ROE after 2017 calls for cautious interpretation of profitability trends, especially given the missing adjusted ROE data.
Adjusted Return on Assets (ROA)
Based on: 10-K (reporting date: 2019-05-26), 10-K (reporting date: 2018-05-27), 10-K (reporting date: 2017-05-28), 10-K (reporting date: 2016-05-29), 10-K (reporting date: 2015-05-31), 10-K (reporting date: 2014-05-25).
2019 Calculations
1 ROA = 100 × Net earnings attributable to General Mills ÷ Total assets
= 100 × ÷ =
2 Adjusted ROA = 100 × Net earnings attributable to General Mills ÷ Adjusted total assets
= 100 × ÷ =
- Total Assets
- Reported total assets demonstrate a fluctuating yet overall increasing trend from 23,145,700 thousand US dollars in 2014 to a peak of 30,624,000 thousand US dollars in 2018, followed by a slight decline to 30,111,200 thousand US dollars in 2019. In contrast, adjusted total assets, which presumably exclude goodwill or other intangible assets, show a gradual decline from 14,495,200 thousand US dollars in 2014 to 12,971,100 thousand US dollars in 2016 before increasing noticeably to 16,559,000 thousand US dollars in 2018, and then decreasing slightly to 16,115,400 thousand US dollars in 2019.
- Return on Assets (ROA)
- Reported ROA shows a decline over the observed period. Starting at 7.88% in 2014, it decreased to 5.56% in 2015, then recovered somewhat in 2016 and 2017 to around 7.8% and 7.6% respectively, before steadily declining again to 6.96% in 2018 and further to 5.82% in 2019.
- Adjusted ROA, which likely measures profitability excluding goodwill effects, starts significantly higher at 12.59% in 2014 and follows a similar pattern to the reported ROA but at consistently higher levels. It decreased to 9.33% in 2015, rebounded to 13.09% in 2016, remained near 12.7–12.9% through 2017 and 2018, before declining to 10.88% in 2019.
- Insights
- The disparity between reported and adjusted total assets suggests that goodwill or intangible assets represent a substantial portion of the total assets, particularly noticeable from 2017 onwards when the gap widens significantly. The adjusted asset base is not only smaller but shows less volatility compared to the reported figures, indicating substantive goodwill-related accounting effects impacting total asset valuations.
- Returns based on adjusted assets are consistently higher, which may indicate that excluding goodwill yields a more favorable view of asset efficiency and profitability. Both reported and adjusted ROA display a downward trend in the latter years, specifically after 2017-2018, suggesting a decline in the efficiency of asset use or profitability across the company, independent of goodwill adjustments.
- Overall, while the total asset base expanded considerably by 2018, primarily due to intangible assets, the declining trend in ROA (both reported and adjusted) raises questions regarding sustainable profitability and operational efficiency over the analyzed periods.