Njosh

Cash..

Cash is not increasing due to increased debt financing and dividend payables increase. It returns more cash to it stockholders as a mature company should.

Kellogg has to spend great amount of money on machinery and equipment. So the reinvestment rate is still relatively high for a mature company =0.52.

Sales to capital ratio = revenue/(BV of Equity + BV of Debt – Cash)

Narrative of the Company. growth, market share and high profit margin??

Kellogg will remain in the food-manufacturing(processing) industry. It will not increase its market share. Market is matured and its growth rate remains almost 0%.

Risk

Kellogg is adding more debt as it matures. New technologies and products will not impact the company’s risk profile. Kellogg will maintain its market share.

How competition is affecting margins. Competition is increasing with organic products. However, organic products will help to boost the market. Major players will acquire new entries to the market. Operating expenses decreasing due to the declining world price of grain and wheat.

Kellogg is one of the 4 major players in the market. It has 26% market share.

Revenue is declining the last four years and the industry predication is only 1.5% revenue growth due to strong competition and new entries to the market.