Financial Statement Analysis of General Mills INTRODUCTION The purpose of this researc

PRODUCT, MARKET, AND INDUSTRY OVERVIEW

General Mills is a consumer foods conglomerate corporation. The company's principal functional markets are (1) packaged foods sold through supermarkets, and (2) prepared foods served in companyowned restaurants. Geographically, the company sells its packaged foods both domestically and internationally. 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 continues 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 nonapparel retailing operations, and a smaller decline occurred in 1988,

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0 thousand), while asmall gross profit was recorded in 1984 ($100 thousand). During this same period, selling and administrative expenses declined annually in absolute terms, but were unstable as a proportion of total revenues0.9 percent 1983, 1.1 percent 1984, and 0.8 percent 1985. Interest expense rose sharply in 1985, to $115.7 million, from $96.7 million in 1984. In 1983, it approximated 1984 levels, at $96.6 million. In absolute terms, net earnings steadily deterioratedy during the 19831985 time period. An $82.0 million profit was recorded in 1983 (1.6 percent of reveues); however, losses were recorded in 1984 ($10.4 million/0.2 percent) and 1985 ($573.3 million/13.7 percent). Order backlog deteriorated sharply from 1980 ($16.1 mil lion) to 1985 ($5.1 million). Order backlog was relatively stable in the 19831985 time period. 3 LIQUIDITY ANALYSIS When working capital is defined as the difference between total current assets and total current liabilities, Fluor Corporation was in a positive position in both 1984 ($9 million), and 1985 ($36 million). Cash flow at the company was negative in 1984 ($53 million), but was positive in both 1983 ($73 million) and 1985 ($757 million). The company's
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