The purpose of this research is to present a financial statement analysis of General Mills. Included in this analysis are (1) a product, market, and industry overview, (2) a revenue and profit analysis, (3) a liquidity analysis, (4) an assess ment of financial condition, and (5) an assessment the com pany's equity stock.
PRODUCT, MARKET, AND INDUSTRY OVERVIEW
General Mills is a consumer foods conglomerate corpora tion. The company's principal functional markets are (1) pack aged foods sold through supermarkets, and (2) prepared foods served in company owned restaurants. Geographically, the com pany sells its packaged foods both domestically and interna tionally. Its restaurant operations, however, are limited to the United States and Canada.
Both the packaged foods and restaurant industries are highly competitive. While packaged foods is a mature industry, new and improved product offerings, together with an expanding population, provide a basis for industry growth. Although some segments of the restaurant industry have reached saturation levels, the trend toward consuming meals away from home contin ues upward in the United States.
Revenues from continuing operations increased annually from 1979 through 1989, inclusive. A major decline in total revenues occurred in 1985, as a result of divestment of toy, fashion, and specialty non apparel retailing operations, and a smaller decline occurred in 1988, as a result of a divestment of specialty apparel retailing operations.
For the 1987 1989 time period, gross profit decreased annually, although actual levels 46.1 percent 1987, 45.9 per cent 1988, and 44.6 percent 1989 were relatively stable. During this same period, selling and administrative expenses also remained relatively stable, although they, too, declined annually as a proportion of sales 33.7 percent 1987, 33.1 per cent 1988, and 32.2 percent 1989.
Interest expense rose sharply in 1988, to $35.1 milli...