Analysis of Investments
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- Income Statement
- Balance Sheet: Assets
- Analysis of Solvency Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Capital Asset Pricing Model (CAPM)
- Selected Financial Data since 2005
- Net Profit Margin since 2005
- Operating Profit Margin since 2005
- Aggregate Accruals
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Adjustment to Net Income (Loss): Mark to Market Available-for-sale Securities
General Mills Inc., adjustment to net earnings attributable to General Mills
US$ in thousands
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 financial data over the six-year period demonstrates fluctuations in the net earnings attributable to the entity. Both reported and adjusted net earnings follow similar trends, indicating consistency between reported figures and those adjusted for investment or other factors.
- Trend Overview
- Net earnings exhibit volatility, with notable declines and recoveries within the period under review.
- May 25, 2014 to May 31, 2015
- There is a significant decrease from approximately 1.82 billion USD to 1.22 billion USD in both reported and adjusted net earnings, reflecting a downturn in profitability during this year.
- May 31, 2015 to May 29, 2016
- Net earnings recover substantially, increasing to nearly 1.70 billion USD, suggesting improved operational performance or favorable market conditions.
- May 29, 2016 to May 28, 2017
- A slight decrease is observed, with net earnings moving to approximately 1.66 billion USD, indicating some challenges or variability in earnings generation.
- May 28, 2017 to May 27, 2018
- Reported and adjusted net earnings reach their peak in the reviewed period, approximately 2.13 billion USD and 2.13 billion USD respectively, signifying a strong financial performance.
- May 27, 2018 to May 26, 2019
- The net earnings decline to around 1.75 billion USD, which reflects a retrenchment from the prior year's peak but remains above earlier lower points.
- Comparison Between Reported and Adjusted Earnings
- The marginal differences between reported and adjusted net earnings across all years indicate that the adjustments made are minimal, suggesting that extraordinary items or investment adjustments have limited impact on overall profitability figures.
Adjusted Profitability Ratios: Mark to Market Available-for-sale Securities (Summary)
General Mills Inc., adjusted profitability ratios
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).
- Net Profit Margin
- The reported net profit margin exhibited fluctuations over the observed periods. Starting at 10.19% in 2014, it dropped notably to 6.93% in 2015, then rebounded to above 10% in 2016 and 2017. The margin peaked at 13.54% in 2018 before declining again to 10.39% in 2019. The adjusted net profit margin follows a nearly identical pattern, indicating minimal differences after adjustments.
- Return on Equity (ROE)
- The reported ROE demonstrates considerable variability across the years. Beginning at 27.92% in 2014, it declined to 24.44% in 2015, then sharply increased to a peak of 38.3% in 2017. Post-2017, it recorded a decrease, ending at 24.85% in 2019. Adjusted ROE values closely mirror the reported figures, suggesting that adjustments have little impact on this ratio.
- Return on Assets (ROA)
- The ROA trend generally reflects a decline after a brief recovery. The reported ROA fell from 7.88% in 2014 to 5.56% in 2015, then rose moderately to 7.82% in 2016 and slightly decreased to 7.6% in 2017. Following this, there is a downward trajectory with ROA falling to 6.96% in 2018 and further to 5.82% in 2019. Adjusted ROA parallels the reported figures consistently, indicating stability in adjusted performance measures.
General Mills Inc., Profitability Ratios: Reported vs. Adjusted
Adjusted Net Profit Margin
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 Net profit margin = 100 × Net earnings attributable to General Mills ÷ Net sales
= 100 × ÷ =
2 Adjusted net profit margin = 100 × Adjusted net earnings attributable to General Mills ÷ Net sales
= 100 × ÷ =
- Net Earnings
- The reported net earnings attributable to General Mills display notable fluctuations over the period from May 2014 to May 2019. Initially, there is a decline from 1.82 billion USD in 2014 to approximately 1.22 billion USD in 2015, representing a significant decrease. Subsequently, the earnings recover and increase to around 1.70 billion USD in 2016, followed by a slight dip to 1.66 billion USD in 2017. The peak is observed in 2018 with earnings reaching 2.13 billion USD, after which there is a reduction to approximately 1.75 billion USD in 2019. The adjusted net earnings follow a very similar pattern throughout the period, indicating minimal adjustments between reported and adjusted figures.
- Net Profit Margin
- The reported net profit margin exhibits a variable trend consistent with net earnings changes. Starting at 10.19% in 2014, it declines substantially to 6.93% in 2015, indicating lower profitability relative to revenue during that year. Profit margins recover progressively to 10.25% in 2016 and improve slightly to 10.61% in 2017. The highest margin is noted in 2018 at 13.54%, suggesting enhanced profitability, before falling again to 10.39% in 2019. The adjusted net profit margins mirror the reported margins almost identically, which suggests limited impact from adjustments on profitability ratios.
- Overall Insights
- The data reflects volatility in both net earnings and profitability margins over the six-year period. The sharp drop in 2015 for both earnings and margin could be indicative of operational challenges or macroeconomic factors impacting performance in that year. The recovery and peak in 2018 suggest successful strategies or market conditions improving financial outcomes. However, the subsequent decline in 2019 points to renewed pressures or changes negatively affecting earnings and profitability. The close alignment of adjusted figures with reported metrics implies that exceptional or non-recurring items had minimal influence on these core financial outcomes during the time frame examined.
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 × Adjusted net earnings attributable to General Mills ÷ Stockholders’ equity
= 100 × ÷ =
Analysis of the financial performance over the six-year period reveals notable fluctuations in both reported and adjusted net earnings attributable to the company. The reported net earnings began at approximately $1.82 billion in 2014, fell significantly to roughly $1.22 billion in 2015, then rebounded to about $1.70 billion in 2016. The earnings remained relatively stable in 2017, around $1.66 billion, before increasing to a peak of approximately $2.13 billion in 2018. However, in 2019, net earnings declined again to about $1.75 billion. The adjusted net earnings follow an almost identical pattern and magnitude, indicating minimal adjustments affecting net income figures.
Regarding the return on equity (ROE), both reported and adjusted figures demonstrate similar trends, suggesting consistent accounting treatment for investments and equity recalculations. ROE started at 27.92% in 2014, decreased to a low of around 24.44% in 2015, then surged to a peak of approximately 38.3% in 2017. After this peak, ROE declined steadily to 34.7% in 2018 and further down to about 24.85% in 2019. This trend suggests significant variations in equity profitability, with particularly strong returns noted in 2016 and 2017, and a notable drop in the most recent year observed.
- Net Earnings Trends
- There is a clear cyclical movement, with an initial decline in 2015 followed by recovery and growth until 2018, and then a decline in 2019. The peak in 2018 is the highest point across the period.
- Return on Equity (ROE) Trends
- ROE demonstrates volatility that broadly aligns with net earnings trends but also reflects changes in shareholders’ equity. The peak in 2017 suggests an efficient use of equity capital during that year.
- Comparison of Reported vs Adjusted Figures
- Adjusted figures closely mirror reported results, indicating limited impact from adjustments on net income and ROE across all periods.
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 × Adjusted net earnings attributable to General Mills ÷ Total assets
= 100 × ÷ =
The financial data reveals several notable trends regarding General Mills' profitability and return on assets over the six-year period under review.
- Net Earnings
- The reported net earnings attributable to the company show significant fluctuations. The earnings declined sharply from approximately 1.82 billion USD in 2014 to around 1.22 billion USD in 2015. This was followed by a recovery phase, with earnings rising to about 1.70 billion USD in 2016. A slight decrease occurred in 2017, then a peak at over 2.13 billion USD in 2018 was recorded, which was subsequently followed by a decline to approximately 1.75 billion USD in 2019. The adjusted net earnings mirror this pattern closely, indicating that the adjustments have a minimal impact on the overall income trend and suggest consistent core operational performance.
- Return on Assets (ROA)
- The reported ROA exhibits a downward trend across the period. Starting at 7.88% in 2014, it fell drastically to 5.56% in 2015. It slightly rebounded in 2016 and 2017, reaching 7.82% and 7.60%, respectively. However, after 2017, the ROA declined again, dropping to 6.96% in 2018 and further down to 5.82% in 2019. The adjusted ROA parallels the reported ROA almost exactly, indicating that asset utilization efficiency from an operational perspective remained consistent after adjustments.
- Insights
- The earnings volatility coupled with the generally declining trend in ROA after 2017 could imply pressures on asset productivity or possibly increased asset base without corresponding gains in net income. The peak in earnings in 2018 suggests a successful period which was not sustained into 2019, possibly indicating external market or internal operational challenges. The near-identical nature of reported versus adjusted figures suggests adjustments were minimal and underlying operational results are reliable indicators of company performance.