Accounting Policy on Inventory
Inventory Disclosure
Adjustment to Inventory: Conversion from LIFO to FIFO
Adjusted Financial Ratios: LIFO vs. FIFO (Summary)
Adjusted Current Ratio
Adjusted Net Profit Margin
Adjusted Total Asset Turnover
Adjusted Financial Leverage
Adjusted Return on Equity (ROE)
Adjusted Return on Assets (ROA)

All inventories in the United States other than grain are valued at the lower of cost, using the last-in, first-out (LIFO) method, or market. Grain inventories are valued at net realizable value, and all related cash contracts and derivatives are valued at fair value, with all net changes in value recorded in earnings currently.

Inventories outside of the United States are generally valued at the lower of cost, using the first-in, first-out (FIFO) method, or net realizable value.

Shipping costs associated with the distribution of finished product to General Mills’ customers are recorded as cost of sales, and are recognized when the related finished product is shipped to and accepted by the customer.

Source: 10-K (filing date: 2019-06-28).

General Mills Inc., balance sheet: inventory

US$ in thousands

		May 26, 2019		May 27, 2018		May 28, 2017		May 29, 2016		May 31, 2015		May 25, 2014
	Raw materials and packaging
	Finished goods
	Grain
	Excess of FIFO over LIFO cost
	Inventories

Based on: 10-K (filing date: 2019-06-28), 10-K (filing date: 2018-06-29), 10-K (filing date: 2017-06-29), 10-K (filing date: 2016-06-30), 10-K (filing date: 2015-07-06), 10-K (filing date: 2014-07-03).

Item	Description	The company
Inventories	Amount after valuation and LIFO reserves of inventory expected to be sold, or consumed within one year or operating cycle, if longer.	General Mills Inc.’s inventories increased from 2017 to 2018 but then slightly declined from 2018 to 2019 not reaching 2017 level.

Adjusting LIFO Inventory to FIFO (Current) Cost

US$ in thousands

		May 26, 2019	May 27, 2018	May 28, 2017	May 29, 2016	May 31, 2015	May 25, 2014
	Adjustment to Inventories
	Inventories at LIFO (as reported)
	Add: Inventory LIFO reserve
	Inventories at FIFO (adjusted)
	Adjustment to Current Assets
	Current assets (as reported)
	Add: Inventory LIFO reserve
	Current assets (adjusted)
	Adjustment to Total Assets
	Total assets (as reported)
	Add: Inventory LIFO reserve
	Total assets (adjusted)
	Adjustment to Stockholders’ Equity
	Stockholders’ equity (as reported)
	Add: Inventory LIFO reserve
	Stockholders’ equity (adjusted)
	Adjustment to Net Earnings Attributable To General Mills
	Net earnings attributable to General Mills (as reported)
	Add: Increase (decrease) in inventory LIFO reserve
	Net earnings attributable to General Mills (adjusted)

Based on: 10-K (filing date: 2019-06-28), 10-K (filing date: 2018-06-29), 10-K (filing date: 2017-06-29), 10-K (filing date: 2016-06-30), 10-K (filing date: 2015-07-06), 10-K (filing date: 2014-07-03).

General Mills Inc.’s inventory value on May 26, 2019 would be $1,772,800 (in thousands) if the FIFO inventory method was used instead of LIFO. General Mills Inc.’s inventories, valued on a LIFO basis, on May 26, 2019 were $1,559,300 . General Mills Inc.’s inventories would have been $213,500 higher than reported on May 26, 2019 if the FIFO method had been used instead.

General Mills Inc., Financial Data: Reported vs. Adjusted

General Mills Inc., adjusted financial ratios

		May 26, 2019	May 27, 2018	May 28, 2017	May 29, 2016	May 31, 2015	May 25, 2014
	Current Ratio
	Reported current ratio (LIFO)
	Adjusted current ratio (FIFO)
	Net Profit Margin
	Reported net profit margin (LIFO)
	Adjusted net profit margin (FIFO)
	Total Asset Turnover
	Reported total asset turnover (LIFO)
	Adjusted total asset turnover (FIFO)
	Financial Leverage
	Reported financial leverage (LIFO)
	Adjusted financial leverage (FIFO)
	Return on Equity (ROE)
	Reported ROE (LIFO)
	Adjusted ROE (FIFO)
	Return on Assets (ROA)
	Reported ROA (LIFO)
	Adjusted ROA (FIFO)

Based on: 10-K (filing date: 2019-06-28), 10-K (filing date: 2018-06-29), 10-K (filing date: 2017-06-29), 10-K (filing date: 2016-06-30), 10-K (filing date: 2015-07-06), 10-K (filing date: 2014-07-03).

Financial ratio	Description	The company
Adjusted current ratio	A liquidity ratio calculated as adjusted current assets divided by current liabilities.	General Mills Inc.’s adjusted current ratio deteriorated from 2017 to 2018 but then slightly improved from 2018 to 2019.
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by revenue.	General Mills Inc.’s adjusted net profit margin ratio improved from 2017 to 2018 but then deteriorated significantly from 2018 to 2019.
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	General Mills Inc.’s adjusted total asset turnover ratio deteriorated from 2017 to 2018 but then slightly improved from 2018 to 2019.
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.	General Mills Inc.’s adjusted financial leverage ratio declined from 2017 to 2018 and from 2018 to 2019.
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity.	General Mills Inc.’s adjusted ROE deteriorated from 2017 to 2018 and from 2018 to 2019.
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by adjusted total assets.	General Mills Inc.’s adjusted ROA deteriorated from 2017 to 2018 and from 2018 to 2019.

General Mills Inc., Financial Ratios: Reported vs. Adjusted

		May 26, 2019	May 27, 2018	May 28, 2017	May 29, 2016	May 31, 2015	May 25, 2014
	As Reported
	Selected Financial Data (US$ in thousands)
	Current assets
	Current liabilities
	Liquidity Ratio
	Current ratio¹
	Adjusted: After Conversion from LIFO to FIFO
	Selected Financial Data (US$ in thousands)
	Adjusted current assets
	Current liabilities
	Liquidity Ratio
	Adjusted current ratio²

Based on: 10-K (filing date: 2019-06-28), 10-K (filing date: 2018-06-29), 10-K (filing date: 2017-06-29), 10-K (filing date: 2016-06-30), 10-K (filing date: 2015-07-06), 10-K (filing date: 2014-07-03).

2019 Calculations

¹ Current ratio = Current assets ÷ Current liabilities
= hidden ÷ hidden = hidden

² Adjusted current ratio = Adjusted current assets ÷ Current liabilities
= hidden ÷ hidden = hidden

Liquidity ratio	Description	The company
Adjusted current ratio	A liquidity ratio calculated as adjusted current assets divided by current liabilities.	General Mills Inc.’s adjusted current ratio deteriorated from 2017 to 2018 but then slightly improved from 2018 to 2019.

		May 26, 2019	May 27, 2018	May 28, 2017	May 29, 2016	May 31, 2015	May 25, 2014
	As Reported
	Selected Financial Data (US$ in thousands)
	Net earnings attributable to General Mills
	Net sales
	Profitability Ratio
	Net profit margin¹
	Adjusted: After Conversion from LIFO to FIFO
	Selected Financial Data (US$ in thousands)
	Adjusted net earnings attributable to General Mills
	Net sales
	Profitability Ratio
	Adjusted net profit margin²

Based on: 10-K (filing date: 2019-06-28), 10-K (filing date: 2018-06-29), 10-K (filing date: 2017-06-29), 10-K (filing date: 2016-06-30), 10-K (filing date: 2015-07-06), 10-K (filing date: 2014-07-03).

2019 Calculations

¹ Net profit margin = 100 × Net earnings attributable to General Mills ÷ Net sales
= 100 × hidden ÷ hidden = hidden

² Adjusted net profit margin = 100 × Adjusted net earnings attributable to General Mills ÷ Net sales
= 100 × hidden ÷ hidden = hidden

Profitability ratio	Description	The company
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by revenue.	General Mills Inc.’s adjusted net profit margin ratio improved from 2017 to 2018 but then deteriorated significantly from 2018 to 2019.

		May 26, 2019	May 27, 2018	May 28, 2017	May 29, 2016	May 31, 2015	May 25, 2014
	As Reported
	Selected Financial Data (US$ in thousands)
	Net sales
	Total assets
	Activity Ratio
	Total asset turnover¹
	Adjusted: After Conversion from LIFO to FIFO
	Selected Financial Data (US$ in thousands)
	Net sales
	Adjusted total assets
	Activity Ratio
	Adjusted total asset turnover²

Based on: 10-K (filing date: 2019-06-28), 10-K (filing date: 2018-06-29), 10-K (filing date: 2017-06-29), 10-K (filing date: 2016-06-30), 10-K (filing date: 2015-07-06), 10-K (filing date: 2014-07-03).

2019 Calculations

¹ Total asset turnover = Net sales ÷ Total assets
= hidden ÷ hidden = hidden

² Adjusted total asset turnover = Net sales ÷ Adjusted total assets
= hidden ÷ hidden = hidden

Activity ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	General Mills Inc.’s adjusted total asset turnover ratio deteriorated from 2017 to 2018 but then slightly improved from 2018 to 2019.

		May 26, 2019	May 27, 2018	May 28, 2017	May 29, 2016	May 31, 2015	May 25, 2014
	As Reported
	Selected Financial Data (US$ in thousands)
	Total assets
	Stockholders’ equity
	Solvency Ratio
	Financial leverage¹
	Adjusted: After Conversion from LIFO to FIFO
	Selected Financial Data (US$ in thousands)
	Adjusted total assets
	Adjusted stockholders’ equity
	Solvency Ratio
	Adjusted financial leverage²

Based on: 10-K (filing date: 2019-06-28), 10-K (filing date: 2018-06-29), 10-K (filing date: 2017-06-29), 10-K (filing date: 2016-06-30), 10-K (filing date: 2015-07-06), 10-K (filing date: 2014-07-03).

2019 Calculations

¹ Financial leverage = Total assets ÷ Stockholders’ equity
= hidden ÷ hidden = hidden

² Adjusted financial leverage = Adjusted total assets ÷ Adjusted stockholders’ equity
= hidden ÷ hidden = hidden

Solvency 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.	General Mills Inc.’s adjusted financial leverage ratio declined from 2017 to 2018 and from 2018 to 2019.

		May 26, 2019	May 27, 2018	May 28, 2017	May 29, 2016	May 31, 2015	May 25, 2014
	As Reported
	Selected Financial Data (US$ in thousands)
	Net earnings attributable to General Mills
	Stockholders’ equity
	Profitability Ratio
	ROE¹
	Adjusted: After Conversion from LIFO to FIFO
	Selected Financial Data (US$ in thousands)
	Adjusted net earnings attributable to General Mills
	Adjusted stockholders’ equity
	Profitability Ratio
	Adjusted ROE²

Based on: 10-K (filing date: 2019-06-28), 10-K (filing date: 2018-06-29), 10-K (filing date: 2017-06-29), 10-K (filing date: 2016-06-30), 10-K (filing date: 2015-07-06), 10-K (filing date: 2014-07-03).

2019 Calculations

¹ ROE = 100 × Net earnings attributable to General Mills ÷ Stockholders’ equity
= 100 × hidden ÷ hidden = hidden

² Adjusted ROE = 100 × Adjusted net earnings attributable to General Mills ÷ Adjusted stockholders’ equity
= 100 × hidden ÷ hidden = hidden

Profitability ratio	Description	The company
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity.	General Mills Inc.’s adjusted ROE deteriorated from 2017 to 2018 and from 2018 to 2019.

		May 26, 2019	May 27, 2018	May 28, 2017	May 29, 2016	May 31, 2015	May 25, 2014
	As Reported
	Selected Financial Data (US$ in thousands)
	Net earnings attributable to General Mills
	Total assets
	Profitability Ratio
	ROA¹
	Adjusted: After Conversion from LIFO to FIFO
	Selected Financial Data (US$ in thousands)
	Adjusted net earnings attributable to General Mills
	Adjusted total assets
	Profitability Ratio
	Adjusted ROA²

Based on: 10-K (filing date: 2019-06-28), 10-K (filing date: 2018-06-29), 10-K (filing date: 2017-06-29), 10-K (filing date: 2016-06-30), 10-K (filing date: 2015-07-06), 10-K (filing date: 2014-07-03).

2019 Calculations

¹ ROA = 100 × Net earnings attributable to General Mills ÷ Total assets
= 100 × hidden ÷ hidden = hidden

² Adjusted ROA = 100 × Adjusted net earnings attributable to General Mills ÷ Adjusted total assets
= 100 × hidden ÷ hidden = hidden

Profitability ratio	Description	The company
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by adjusted total assets.	General Mills Inc.’s adjusted ROA deteriorated from 2017 to 2018 and from 2018 to 2019.

	General Mills Inc.	Other companies (not purchased previously)
Financial Statements
Common-Size Financial Statements
Analysis of Financial Ratios
Relative Valuation
Discounted Cash Flow (DCF) Valuation
Economic Value Added (EVA)
Long-term Trends
Analysis of Components of Financial Statements
Financial Reporting Quality

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Financial Statements
Common-Size Financial Statements
Analysis of Financial Ratios
Relative Valuation
Discounted Cash Flow (DCF) Valuation
Economic Value Added (EVA)
Long-term Trends
Analysis of Components of Financial Statements
Financial Reporting Quality

General Mills Inc. (GIS)

Analysis of Inventory

Accounting Policy on Inventory

Inventory Disclosure

Adjustment to Inventory: Conversion from LIFO to FIFO

General Mills Inc., Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios: LIFO vs. FIFO (Summary)

General Mills Inc., Financial Ratios: Reported vs. Adjusted

Adjusted Current Ratio

Adjusted Net Profit Margin

Adjusted Total Asset Turnover

Adjusted Financial Leverage

Adjusted Return on Equity (ROE)

Adjusted Return on Assets (ROA)