EVA is registered trademark of Stern Stewart.

Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.

Economic Profit
Net Operating Profit after Taxes (NOPAT)
Cash Operating Taxes
Invested Capital
Cost of Capital
Economic Spread Ratio
Economic Profit Margin

General Mills Inc., economic profit calculation

US$ in thousands

	12 months ended	May 26, 2019	May 27, 2018	May 28, 2017	May 29, 2016	May 31, 2015	May 25, 2014
	Net operating profit after taxes (NOPAT)¹
	Cost of capital²
	Invested capital³

	Economic profit⁴

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).

¹ NOPAT. See details »

² Cost of capital. See details »

³ Invested capital. See details »

<>⁴ 2019 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
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–

×

=

Item	Description	The company
Economic profit	Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital.	General Mills Inc.’s economic profit declined from 2017 to 2018 but then slightly increased from 2018 to 2019.

General Mills Inc., NOPAT calculation

US$ in thousands

	12 months ended	May 26, 2019	May 27, 2018	May 28, 2017	May 29, 2016	May 31, 2015	May 25, 2014
	Net earnings attributable to General Mills
	Deferred income tax expense (benefit)¹
	Increase (decrease) in allowance for doubtful accounts²
	Increase (decrease) in LIFO reserve³
	Increase (decrease) in reserve for restructuring and other exit charges⁴
	Increase (decrease) in equity equivalents⁵
	Interest expense, net of capitalized interest
	Interest expense, operating lease liability⁶
	Adjusted interest expense, net of capitalized interest
	Tax benefit of interest expense, net of capitalized interest⁷
	Adjusted interest expense, net of capitalized interest, after taxes⁸
	(Gain) loss on marketable securities
	Interest income
	Investment income, before taxes
	Tax expense (benefit) of investment income⁹
	Investment income, after taxes¹⁰
	Net income (loss) attributable to noncontrolling interest
	Net operating profit after taxes (NOPAT)

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).

¹ Elimination of deferred tax expense. See details »

² Addition of increase (decrease) in allowance for doubtful accounts.

³ Addition of increase (decrease) in LIFO reserve. See details »

⁴ Addition of increase (decrease) in reserve for restructuring and other exit charges.

⁵ Addition of increase (decrease) in equity equivalents to net earnings attributable to General Mills.

⁶ 2019 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= hidden × hidden = hidden

⁷ 2019 Calculation
Tax benefit of interest expense, net of capitalized interest = Adjusted interest expense, net of capitalized interest × Statutory income tax rate
= hidden × 21.00% = hidden

⁸ Addition of after taxes interest expense to net earnings attributable to General Mills.

⁹ 2019 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= hidden × 21.00% = hidden

¹⁰ Elimination of after taxes investment income.

Item	Description	The company
NOPAT	Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income.	General Mills Inc.’s NOPAT declined from 2017 to 2018 but then increased from 2018 to 2019 exceeding 2017 level.

General Mills Inc., cash operating taxes calculation

US$ in thousands

	12 months ended	May 26, 2019	May 27, 2018	May 28, 2017	May 29, 2016	May 31, 2015	May 25, 2014
	Income taxes
	Less: Deferred income tax expense (benefit)
	Add: Tax savings from interest expense, net of capitalized interest
	Less: Tax imposed on investment income
	Cash operating taxes

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
Cash operating taxes	Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction.	General Mills Inc.’s cash operating taxes increased from 2017 to 2018 but then declined significantly from 2018 to 2019.

General Mills Inc., invested capital calculation (financing approach)

US$ in thousands

		May 26, 2019	May 27, 2018	May 28, 2017	May 29, 2016	May 31, 2015	May 25, 2014
	Current portion of long-term debt
	Notes payable
	Long-term debt, excluding current portion
	Operating lease liability¹
	Total reported debt & leases
	Stockholders’ equity
	Net deferred tax (assets) liabilities²
	Allowance for doubtful accounts³
	Excess of FIFO over LIFO cost⁴
	Reserve for restructuring and other exit charges⁵
	Equity equivalents⁶
	Accumulated other comprehensive (income) loss, net of tax⁷
	Redeemable interest
	Noncontrolling interests
	Adjusted stockholders’ equity
	Construction in progress⁸
	Marketable securities⁹
	Invested capital

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).

¹ Addition of capitalized operating leases.

² Elimination of deferred taxes from assets and liabilities. See details »

³ Addition of allowance for doubtful accounts receivable.

⁴ Addition of LIFO reserve. See details »

⁵ Addition of reserve for restructuring and other exit charges.

⁶ Addition of equity equivalents to stockholders’ equity.

⁷ Removal of accumulated other comprehensive income.

⁸ Subtraction of construction in progress.

⁹ Subtraction of marketable securities.

Item	Description	The company
Invested capital	Capital is an approximation of the economic book value of all cash invested in going-concern business activities.	General Mills Inc.’s invested capital increased from 2017 to 2018 but then slightly declined from 2018 to 2019.

General Mills Inc., cost of capital calculations

	Weights			Cost of capital
Equity²		÷	=		×		=
Debt³		÷	=		×	× (1 – 21.00%)	=
Operating lease liability⁴		÷	=		×	× (1 – 21.00%)	=
Total capital:	Total weights:			Cost of total capital:

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

¹ US$ in thousands

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

	Weights			Cost of capital
Equity²		÷	=		×		=
Debt³		÷	=		×	× (1 – 29.40%)	=
Operating lease liability⁴		÷	=		×	× (1 – 29.40%)	=
Total capital:	Total weights:			Cost of total capital:

Based on: 10-K (filing date: 2018-06-29).

¹ US$ in thousands

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

	Weights			Cost of capital
Equity²		÷	=		×		=
Debt³		÷	=		×	× (1 – 35.00%)	=
Operating lease liability⁴		÷	=		×	× (1 – 35.00%)	=
Total capital:	Total weights:			Cost of total capital:

Based on: 10-K (filing date: 2017-06-29).

¹ US$ in thousands

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

	Weights			Cost of capital
Equity²		÷	=		×		=
Debt³		÷	=		×	× (1 – 35.00%)	=
Operating lease liability⁴		÷	=		×	× (1 – 35.00%)	=
Total capital:	Total weights:			Cost of total capital:

Based on: 10-K (filing date: 2016-06-30).

¹ US$ in thousands

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

	Weights			Cost of capital
Equity²		÷	=		×		=
Debt³		÷	=		×	× (1 – 35.00%)	=
Operating lease liability⁴		÷	=		×	× (1 – 35.00%)	=
Total capital:	Total weights:			Cost of total capital:

Based on: 10-K (filing date: 2015-07-06).

¹ US$ in thousands

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

	Weights			Cost of capital
Equity²		÷	=		×		=
Debt³		÷	=		×	× (1 – 35.00%)	=
Operating lease liability⁴		÷	=		×	× (1 – 35.00%)	=
Total capital:	Total weights:			Cost of total capital:

Based on: 10-K (filing date: 2014-07-03).

¹ US$ in thousands

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

General Mills Inc., economic spread ratio calculation

		May 26, 2019	May 27, 2018	May 28, 2017	May 29, 2016	May 31, 2015	May 25, 2014
	Selected Financial Data (US$ in thousands)
	Economic profit¹
	Invested capital²
	Performance Ratio
	Economic spread ratio³

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).

¹ Economic profit. See details »

² Invested capital. See details »

³ 2019 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × hidden ÷ hidden = hidden

Performance ratio	Description	The company
Economic spread ratio	The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital.	General Mills Inc.’s economic spread ratio deteriorated from 2017 to 2018 but then slightly improved from 2018 to 2019.

General Mills Inc., economic profit margin calculation

		May 26, 2019	May 27, 2018	May 28, 2017	May 29, 2016	May 31, 2015	May 25, 2014
	Selected Financial Data (US$ in thousands)
	Economic profit¹
	Net sales
	Performance Ratio
	Economic 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).

¹ Economic profit. See details »

² 2019 Calculation
Economic profit margin = 100 × Economic profit ÷ Net sales
= 100 × hidden ÷ hidden = hidden

Performance ratio	Description	The company
Economic profit margin	The ratio of economic profit to sales. It is the company’s profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin.	General Mills Inc.’s economic profit margin deteriorated from 2017 to 2018 but then slightly improved from 2018 to 2019.

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General Mills Inc. (GIS)

Economic Value Added (EVA)

Economic Profit

Net Operating Profit after Taxes (NOPAT)

Cash Operating Taxes

Invested Capital

Cost of Capital

May 26, 2019

May 27, 2018

May 28, 2017

May 29, 2016

May 31, 2015

May 25, 2014

Economic Spread Ratio

Economic Profit Margin