General Mills Inc. (NYSE:GIS)

The analysis of the annual financial data reveals several notable trends in inventory-related items over the six-year period ending May 2019.

Raw materials and packaging

This category exhibited fluctuations with an initial decline from 419,000 thousand USD in 2014 to approximately 390,800 thousand USD in 2015. Moderate increases followed, with a notable rise to 434,900 thousand USD by 2019. Overall, despite some variability, the trend suggests a gradual increase in investment or holdings in raw materials and packaging in the later years.

Finished goods

Finished goods inventories showed variability, starting at 1,260,200 thousand USD in 2014 and experiencing a slight increase in 2015. However, there was a decline in 2016 to approximately 1,163,100 thousand USD. In the subsequent years, the finished goods inventory rose again, peaking at 1,364,200 thousand USD in 2018 before decreasing to 1,245,900 thousand USD in 2019. The pattern reveals moderate volatility with a peak in 2018 followed by a reduction in 2019.

Grain

Grain inventory levels demonstrated a generally declining trend in the initial years, dropping from 97,100 thousand USD in 2014 to a low of 72,600 thousand USD in 2016. After 2016, grain inventory began recovering, reaching 92,000 thousand USD by 2019. This U-shaped pattern indicates initial reduction in grain holdings, with replenishment occurring in the latter years.

Excess of FIFO over LIFO cost

The excess of FIFO over LIFO cost consistently remained negative throughout the period, with values fluctuating slightly around -210,000 to -220,000 thousand USD. There was no significant trend of increase or decrease, indicating relative stability in the valuation difference between these inventory accounting methods.

Inventories (Total)

Total inventories decreased from 1,559,400 thousand USD in 2014 to a low of 1,413,700 thousand USD in 2016. From 2016 onwards, inventories increased, peaking at 1,642,200 thousand USD in 2018 before falling modestly to 1,559,300 thousand USD in 2019. This overall U-shaped trajectory mirrors patterns seen in individual inventory components, reflecting a contraction followed by expansion and slight retraction.

In summary, the data illustrates that inventory levels experienced declines during the middle years of the period followed by recoveries towards the end. Specifically, raw materials and grain inventories showed initial decreases but generally trended upwards by 2019. Finished goods inventories varied but culminated in a net increase from the start to the end of the period, despite some volatility. The consistent negative excess of FIFO over LIFO cost suggests stable inventory accounting impacts without major shifts. Overall, the inventory management appears responsive to operational needs with adjustments reflected across categories over time.

Inventories

Reported inventories exhibit a slight decline from 1,559,400 thousand USD in 2014 to 1,413,700 thousand USD in 2016, followed by a recovery peaking at 1,642,200 thousand USD in 2018 before decreasing again to 1,559,300 thousand USD in 2019. Adjusted inventories, accounting for LIFO reserves, follow a similar pattern but at consistently higher levels, reflecting an increase from 1,776,300 thousand USD in 2014 to a high of 1,855,400 thousand USD in 2018 and declining to 1,772,800 thousand USD in 2019.

Current Assets

Reported current assets decreased markedly from 4,393,500 thousand USD in 2014 to 3,785,700 thousand USD in 2015, then stabilized and showed gradual increases through 2019, reaching 4,186,500 thousand USD. Adjusted current assets follow the same trend but remain consistently higher each year, increasing from 4,610,400 thousand USD in 2014 to 4,400,000 thousand USD in 2019.

Total Assets

Reported total assets demonstrate a decline from 23,145,700 thousand USD in 2014 to approximately 21,712,300 thousand USD in 2016, remaining stable through 2017, followed by a significant increase to 30,624,000 thousand USD in 2018 and a slight decrease to 30,111,200 thousand USD in 2019. Adjusted total assets mirror this pattern at marginally higher levels, rising consistently to 30,837,200 thousand USD in 2018 and then to 30,324,700 thousand USD in 2019.

Stockholders’ Equity

Reported stockholders’ equity shows a clear downward trend from 6,534,800 thousand USD in 2014 to 4,327,900 thousand USD in 2017, followed by a recovery surging to 7,054,500 thousand USD in 2019. Adjusted stockholders’ equity, reflecting LIFO adjustments, follows the same trajectory but consistently presents higher values, culminating at 7,268,000 thousand USD in 2019.

Net Earnings Attributable to General Mills

Reported net earnings display some volatility, falling from 1,824,400 thousand USD in 2014 to 1,221,300 thousand USD in 2015, increasing to 1,697,400 thousand USD in 2016, then fluctuating around 1,650,000 thousand USD before peaking at 2,131,000 thousand USD in 2018 and dropping to 1,752,700 thousand USD in 2019. Adjusted net earnings closely align with reported figures, with minimal variation due to inventory adjustments.

Overall Observations

The data indicates that inventory adjustments for LIFO reserves have a consistent additive effect across all periods, enhancing the size of inventories, current assets, total assets, and stockholders’ equity. The company experienced a notable increase in total assets and stockholders’ equity beginning in 2018, which may indicate significant asset acquisitions or valuation changes. Despite fluctuations, net earnings generally remained positive with peaks in 2018, aligning with the increases in assets and equity. The alignment between reported and adjusted net earnings suggests that LIFO reserve adjustments have limited impact on reported profitability but are more materially affecting balance sheet valuations.

Current Ratio Trends

The reported current ratio exhibits a generally declining trend from 0.81 in 2014 to a low of 0.56 in 2018, with a slight recovery to 0.59 in 2019. The adjusted current ratio follows a similar pattern, starting at 0.85 in 2014, declining steadily to 0.59 in 2018, and marginally increasing to 0.62 in 2019. This indicates a weakening short-term liquidity position over the period, although the adjustments for LIFO reserve slightly improve the liquidity ratios across most years.

Net Profit Margin Analysis

The net profit margin, both reported and adjusted, shows variability with an overall increase from 2014 through 2018, peaking at 13.54% (reported) and 13.56% (adjusted) in 2018. However, in 2019, it declines notably to around 10.39% in both measures. The minimal difference between reported and adjusted margins suggests that inventory accounting adjustments have negligible effect on profitability in percentage terms.

Total Asset Turnover Examination

Total asset turnover ratios decrease from approximately 0.77-0.79 in early years to a low of 0.51 in 2018, with a slight improvement to 0.56 in 2019. The adjusted ratios closely mirror the reported figures, indicating that inventory reserve adjustments do not significantly alter asset utilization measures. This declining trend suggests reduced efficiency in generating sales from asset base over the years.

Financial Leverage Observation

Financial leverage rises from about 3.46-3.54 in 2014 to a peak near or above 5.00 in 2017 and 2018, before decreasing to about 4.17-4.27 in 2019. Adjusted leverage values consistently remain slightly lower than reported figures, reflecting the impact of accounting adjustments. The increasing leverage up to 2018 indicates greater reliance on debt or financial obligations to finance assets, with some deleveraging evident in 2019.

Return on Equity (ROE) Insights

ROE shows a generally upward trajectory from 2014 through 2017, peaking around 38.3% reported and 36.31% adjusted in 2017, followed by a decline to roughly 24% by 2019. The adjustment effect consistently reduces ROE slightly. This pattern suggests that after strong profitability supported by higher leverage, returns to shareholders weakened in the latter years.

Return on Assets (ROA) Patterns

ROA trends align with profitability and asset efficiency observations, starting near 7.8% in 2014, fluctuating moderately, with a dip after 2017 down to approximately 5.8% in 2019. Adjusted ROA values are marginally lower but closely track reported values, indicating limited effect of inventory accounting adjustments on asset profitability.

Overall Financial Performance Summary

Across the six-year span, the data reveal weakening liquidity and asset turnover, coupled with elevated financial leverage peaking in 2017-2018, which corresponds with the highest observed ROE and net profit margins. The decline in these profitability and efficiency metrics in 2019 suggests challenges in sustaining previous performance levels. Adjustments for inventory LIFO reserves consistently show slight improvements in liquidity and reductions in leverage and return ratios, demonstrating the modest impact of these accounting considerations on overall financial metrics.

Current Assets

Reported current assets demonstrate a fluctuating trend, starting at 4,393,500 thousand USD in 2014 and decreasing to 3,785,700 thousand USD in 2015, followed by a gradual increase through 2016 to 2019, reaching 4,186,500 thousand USD. The adjusted current assets, which account for inventory LIFO reserve adjustments, follow a similar pattern but exhibit consistently higher values compared to reported figures, beginning at 4,610,400 thousand USD in 2014 and rising steadily to 4,400,000 thousand USD by 2019.

Current Ratio

The reported current ratio shows a declining trajectory over the period analyzed, starting at 0.81 in 2014 and declining to 0.59 in 2019, indicating a weakening short-term liquidity position. The adjusted current ratio parallels this trend but remains marginally higher throughout, beginning at 0.85 and finishing at 0.62. Both ratios reveal a notable drop after 2017, highlighting a potential reduction in liquidity and ability to cover short-term liabilities with current assets.

Insights

The consistent premium of adjusted figures over reported figures suggests the inventory LIFO reserve adjustments materially impact the valuation of current assets and liquidity metrics. Despite fluctuations, there is an overall stabilization in the adjusted current assets from 2015 onward, whereas the current ratios indicate increased liquidity pressure in the later years. This disparity points to the importance of considering inventory accounting methods when assessing operational liquidity and financial health.

The financial data reveals fluctuations in net earnings and profit margins over the six-year period.

Net Earnings

The reported net earnings attributable to the company show variability between 2014 and 2019. Starting at $1,824,400 thousand in 2014, earnings decreased significantly in 2015 to $1,221,300 thousand, followed by a rebound in 2016 to $1,697,400 thousand. Earnings remained relatively stable in 2017 at $1,657,500 thousand before reaching a peak in 2018 at $2,131,000 thousand. In 2019, there was a decline to $1,752,700 thousand. The adjusted net earnings closely mirror this trend, with values slightly different but maintaining the same overall pattern, reflecting consistent adjustments related to the LIFO reserve.

Net Profit Margin

The reported net profit margin exhibits similar fluctuations during the period. It decreased from 10.19% in 2014 to a low of 6.93% in 2015, then increased steadily through 2017, 2018, and 2019, peaking at 13.54% in 2018. The adjusted net profit margin values closely follow the reported margins, with minimal differences, reinforcing the consistency of adjustments and the overall profitability trend measured on a margin basis.

Overall Trends and Insights

Both reported and adjusted financial data indicate a significant dip in profitability in 2015, which may correspond to operational challenges or market conditions impacting earnings that year. Subsequent years demonstrate recovery and growth, culminating in strong profitability in 2018 before a moderate decrease in 2019. The close alignment between reported and adjusted figures suggests that inventory-related adjustments (LIFO reserves) have had limited effect on the overall earnings and margin trends, indicating stable inventory accounting practices.

Over the six-year period under review, total assets as reported showed a general decline from 23,145,700 thousand US dollars in 2014 to 21,912,300 thousand US dollars in 2016, followed by a slight increase and then a significant rise reaching 30,624,000 thousand US dollars in 2018 before a minor reduction to 30,111,200 thousand US dollars in 2019. When adjusted for the inventory LIFO reserve, total assets exhibited a similar pattern but consistently remained higher than the reported figures, indicating the impact of inventory accounting adjustments on asset valuation.

Total asset turnover ratios, both reported and adjusted, closely align throughout the period, suggesting limited effect of inventory adjustment on operational efficiency metrics. The turnover ratio started at 0.77 in 2014, peaked slightly at 0.80 in 2015, then gradually declined to 0.72 in 2017. A marked decrease occurred in 2018, with turnover ratios falling to 0.51, before a modest recovery to 0.56 in 2019. This trend points to a reduction in asset utilization efficiency during the latter years despite the increase in asset base, implying potential challenges in generating sales relative to assets held.

The consistent gap between reported and adjusted total assets throughout the timeframe emphasizes the relevance of considering the inventory LIFO reserve for a more accurate representation of asset size. However, the minimal divergence between reported and adjusted asset turnover ratios suggests that the inventory valuation method has negligible influence on turnover performance indicators.

Total Assets

The reported total assets exhibit a relatively stable trend from 2014 through 2017, fluctuating slightly around 21.7 to 23.1 billion US dollars. A significant increase is observed in 2018, reaching over 30.6 billion US dollars, followed by a slight decrease in 2019 to approximately 30.1 billion US dollars. The adjusted total assets follow a similar pattern, consistently marginally higher than reported figures, reflecting the inventory LIFO reserve adjustment.

Stockholders’ Equity

Reported stockholders’ equity shows a decreasing trend from 6.5 billion US dollars in 2014 down to 4.3 billion in 2017, before rising again to 6.1 billion in 2018 and further increasing to about 7.1 billion in 2019. Adjusted equity values parallel the reported data but are slightly higher, maintaining the impact of adjustments. The equity dip between 2014 and 2017 suggests challenges or increased distributions during that period, with a recovery phase evident in the two subsequent years.

Financial Leverage

The reported financial leverage ratio increases from 3.54 in 2014 to a peak of 5.04 in 2017, then decreases to 4.27 by 2019. The adjusted leverage ratio mirrors this trend, beginning at 3.46 in 2014, peaking at 4.85 in 2017 and 2018, and declining to 4.17 in 2019. This indicates that the company’s reliance on debt relative to equity increased until 2017 and then moderated, possibly due to the equity recovery or debt repayment in later years.

Overall Insights

The period under review shows a notable growth in total assets starting in 2018, suggesting acquisition activity or asset expansion. Equity reductions through 2017 paired with increasing leverage ratios indicate a shift toward greater debt financing or equity reductions in earlier years. The subsequent rebound in equity and reduction in leverage imply financial strengthening or deleveraging modifications beginning in 2018. The consistent differences between reported and adjusted figures highlight the effect of inventory LIFO reserve adjustments, which slightly inflate asset and equity values, providing a more comprehensive view of the company’s financial position.

The financial data reveals several key trends in net earnings, stockholders' equity, and return on equity (ROE) over the six-year period from 2014 to 2019, both on a reported basis and adjusted for the inventory LIFO reserve.

Net Earnings

Reported net earnings show significant fluctuations across the years. Beginning at 1,824,400 thousand USD in 2014, earnings decreased sharply to 1,221,300 thousand USD in 2015. This was followed by a recovery phase reaching a peak of 2,131,000 thousand USD in 2018, before declining again to 1,752,700 thousand USD in 2019. The adjusted net earnings follow a nearly identical pattern, indicating that LIFO reserve adjustments have minimal impact on the reported earnings trend.

Stockholders’ Equity

Reported stockholders’ equity experienced a decline from 6,534,800 thousand USD in 2014 to a low point of 4,327,900 thousand USD in 2017. After this trough, the equity base rebounded significantly, reaching 7,054,500 thousand USD by 2019, representing the highest value in the dataset. Adjusted stockholders’ equity exhibits a similar trajectory but consistently reports higher equity values each year, reflecting the inventory adjustments' contribution to equity strength.

Return on Equity (ROE)

Reported ROE demonstrates considerable volatility with an initial value of 27.92% in 2014, dropping to 24.44% in 2015. Thereafter, ROE increased substantially to reach a peak of 38.3% in 2017, before declining again to 24.85% in 2019. Adjusted ROE follows the same general pattern but at slightly lower percentages throughout, indicating that inventory adjustments temper the measured profitability relative to equity.

Overall Insights

The period under review shows a cycle of decline and subsequent recovery in both earnings and equity, suggesting periods of operational or market challenges followed by improved performance or restructuring. The adjustments related to inventory LIFO reserve result in higher equity values and moderately lower ROE percentages, reflecting more conservative profitability metrics when inventory accounting adjustments are considered. The notable peak in ROE in 2017 suggests a particularly efficient use of equity that year, although this was not sustained into 2019. The alignment between reported and adjusted figures confirms consistency in the underlying financial performance, with the adjustments providing additional clarity on inventory valuation impact.

The financial data over the six-year period reveals several notable trends in the company’s earnings, asset base, and profitability ratios. Both reported and inventory LIFO reserve adjusted net earnings exhibit fluctuations, with a peak occurring in the fiscal year ending in May 2018, followed by a decline in the subsequent year.

Net Earnings

The reported net earnings attributable to the company show an initial decline from 1,824,400 thousand US dollars in 2014 to 1,221,300 thousand US dollars in 2015. This is followed by a recovery and growth up to 2,131,000 thousand US dollars in 2018, before decreasing again to 1,752,700 thousand US dollars in 2019.

The adjusted net earnings follow a very similar pattern, starting at 1,819,500 thousand US dollars in 2014 and moving down to 1,218,600 thousand US dollars in 2015, with subsequent growth peaking at 2,135,100 thousand US dollars in 2018, then tapering off slightly in 2019 to 1,753,000 thousand US dollars. The close alignment of reported and adjusted earnings suggests limited impact from inventory adjustments on net earnings.

Total Assets

The reported total assets reveal a relatively stable trend from 2014 through 2017, fluctuating slightly between approximately 21.7 billion and 23.1 billion US dollars. A significant increase appears in 2018 with reported total assets surging to over 30.6 billion US dollars, maintaining a similar level in 2019 at around 30.1 billion US dollars.

The adjusted total assets parallel the reported figures closely, starting from approximately 23.4 billion US dollars in 2014 and following a similar pattern with a marked increase in 2018 to roughly 30.8 billion US dollars, with a slight decline thereafter to 30.3 billion US dollars in 2019. This suggests that adjustments related to inventory LIFO reserve have a measurable but steady effect on the reported asset base.

Return on Assets (ROA)

The reported ROA displays a declining trend over the period. After a high of 7.88% in 2014, the ratio drops sharply to 5.56% in 2015, recovers slightly to around 7.82% in 2016 and 7.6% in 2017, then steadily decreases to 6.96% in 2018 and further to 5.82% in 2019.

The adjusted ROA follows a nearly identical pattern, starting at 7.79% in 2014, dipping to 5.49% in 2015, rebounding in the middle years, and then declining again toward 5.78% by 2019. The minimal difference between reported and adjusted ROA indicates that inventory LIFO reserve adjustments exert marginal influence on this profitability metric.

Overall, the company experienced volatility in net earnings and ROA, with earnings peaking in 2018 but asset growth also rising substantially during that year. The surge in total assets could indicate acquisition activity or significant capital investment. Meanwhile, the declining ROA trend in recent years may reflect challenges in efficiently translating asset growth into proportional earnings. Inventory LIFO reserve adjustments have a consistent but limited effect on the financial statements and related performance ratios throughout the period analyzed.