General Mills Inc. (NYSE:GIS)

The analysis of the financial data reveals distinct trends in the company’s debt, equity, and leverage over the 15-year period ending in 2019.

Notes payable and long-term debt

The company’s debt levels exhibit a general upward trend from 2005 through 2019, with some fluctuations. Starting at approximately $6.19 billion in 2005, the debt rose moderately to around $7.08 billion in 2009 before declining to about $6.43 billion in 2010. From 2010 onward, debt levels increased more sharply, reaching a peak of approximately $15.82 billion in 2018 before declining slightly to $14.49 billion in 2019. The notable increase in the later years suggests a period of increased borrowing or refinancing.

Stockholders’ equity

Stockholders’ equity fluctuated over the period but showed an overall decline from 2005 through 2017. It began at about $5.68 billion in 2005 and peaked briefly at around $6.42 billion in 2012. However, after 2012, equity decreased substantially, hitting a low of approximately $4.33 billion in 2017. There was a recovery phase in the last two years, with equity increasing to roughly $7.05 billion in 2019. This pattern indicates potential challenges in retaining earnings or capital structure adjustments during the middle years followed by a strengthening in equity toward the end of the period.

Debt to equity ratio

The debt to equity ratio reflects the changes in debt and equity, highlighting increased leverage over time. Initially, the ratio was relatively stable, fluctuating around 1.05 to 1.37 from 2005 to 2009, indicating balanced capital structure management. From 2010 onwards, the ratio climbed significantly, reaching a high of 2.58 in 2018 before slightly decreasing to 2.05 in 2019. This increase illustrates a heavier reliance on debt financing relative to equity, especially between 2015 and 2018, corresponding with the surge in debt and decline in equity during that period.

Overall, the company’s financial structure appears to have shifted towards greater indebtedness in recent years, with leverage more than doubling compared to the early period. While debt levels increased substantially, equity saw a decline before recovering slightly at the end of the timeline. This trend underscores a potential strategic emphasis on leveraging debt, which may affect financial risk and capital costs.