Financial management assignment (MBA)
jena.a
ratios_kellogg_mc-2.xlsBalance Sheet
| Kellogg (NYSE) - K | ||||||||
| BALANCE SHEET (US$ in millions, except per-share data) | ||||||||
| 12/31/12 | 12/31/11 | 12/31/10 | 12/31/09 | |||||
| $ Amount | % | $ Amount | % | $ Amount | % | $ Amount | % | |
| Assets | Assets | Assets | Assets | |||||
| Assets | ||||||||
| Cash | $ 281.00 | 1.9% | $ 460.00 | 3.9% | $ 444.00 | 3.7% | $ 334.00 | 3.0% |
| Accounts Receivables | $ 1,454.00 | 9.6% | $ 1,188.00 | 9.9% | $ 1,190.00 | 10.0% | $ 1,093.00 | 9.8% |
| Inventory | $ 1,365.00 | 9.0% | $ 1,174.00 | 9.8% | $ 1,056.00 | 8.9% | $ 910.00 | 8.1% |
| Other | $ 280.00 | 1.8% | $ 247.00 | 2.1% | $ 225.00 | 1.9% | $ 221.00 | 2.0% |
| Total Current Assets | $ 3,380.00 | 22.3% | $ 3,069.00 | 25.7% | $ 2,915.00 | 24.6% | $ 2,558.00 | 22.8% |
| Net Plant/Property/Equipment | $ 3,782.00 | 24.9% | $ 3,281.00 | 27.5% | $ 3,128.00 | 26.4% | $ 3,010.00 | 26.9% |
| Goodwill | $ 7,412.00 | 48.8% | $ 5,077.00 | 42.5% | $ 5,084.00 | 42.9% | $ 5,101.00 | 45.5% |
| Other Fixed Assets | $ 610.00 | 4.0% | $ 516.00 | 4.3% | $ 720.00 | 6.1% | $ 531.00 | 4.7% |
| Total Non-Current Assets | $ 11,804.00 | 77.7% | $ 8,874.00 | 74.3% | $ 8,932.00 | 75.4% | $ 8,642.00 | 77.2% |
| Total Assets | $ 15,184.00 | 100.0% | $ 11,943.00 | 100.0% | $ 11,847.00 | 100.0% | $ 11,200.00 | 100.0% |
| Liabilities and Equity | ||||||||
| Payables | $ 1,448.00 | 9.5% | $ 1,255.00 | 10.5% | $ 1,269.00 | 10.7% | $ 1,143.00 | 10.2% |
| Accrued Expenses,Current | $ 783.00 | 5.2% | $ 652.00 | 5.5% | $ 558.00 | 4.7% | $ 731.00 | 6.5% |
| Current Debt | $ 1,820.00 | 12.0% | $ 995.00 | 8.3% | $ 996.00 | 8.4% | $ 45.00 | 0.4% |
| Other Current Liabilities | $ 472.00 | 3.1% | $ 411.00 | 3.4% | $ 361.00 | 3.0% | $ 369.00 | 3.3% |
| Total Current Liabilities | $ 4,523.00 | 29.8% | $ 3,313.00 | 27.7% | $ 3,184.00 | 26.9% | $ 2,288.00 | 20.4% |
| Long-term Debt | $ 6,082.00 | 40.1% | $ 5,037.00 | 42.2% | $ 4,908.00 | 41.4% | $ 4,835.00 | 43.2% |
| Deferred Liabilities | $ 523.00 | 3.4% | $ 643.00 | 5.4% | $ 697.00 | 5.9% | $ 425.00 | 3.8% |
| Other | $ 1,637.00 | 10.8% | $ 1,154.00 | 9.7% | $ 900.00 | 7.6% | $ 1,380.00 | 12.3% |
| Total Non-Current Liabilities | $ 8,242.00 | 54.3% | $ 6,834.00 | 57.2% | $ 6,505.00 | 54.9% | $ 6,640.00 | 59.3% |
| Total Liabilities | $ 12,765.00 | 84.1% | $ 10,147.00 | 85.0% | $ 9,689.00 | 81.8% | $ 8,928.00 | 79.7% |
| Total Equity | $ 2,419.00 | 15.9% | $ 1,796.00 | 15.0% | $ 2,158.00 | 18.2% | $ 2,272.00 | 20.3% |
| Total liabilities and equity | $ 15,184.00 | 100.0% | $ 11,943.00 | 100.0% | $ 11,847.00 | 100.0% | $ 11,200.00 | 100.0% |
| Per Share Data | ||||||||
| Common shares outstanding 1 | 361.27 | 357.3 | 365.6 | 381.38 | ||||
| Book Value per share 2 | $ 6.70 | $ 5.03 | $ 5.90 | $ 5.96 | ||||
| Market Value per share | $ 55.33 | $ 50.57 | $ 51.08 | $ 54.00 | ||||
| NOTES | ||||||||
| 1 millions of shares | ||||||||
| 2 = Equity/shares |
Income Statement
| Kellogg (NYSE) - K | ||||||||
| INCOME STATEMENT (US$ in millions, except per-share data) | ||||||||
| 12/31/12 | 12/31/11 | 12/31/10 | 12/31/09 | |||||
| $ Amount | % | $ Amount | % | $ Amount | % | $ Amount | % | |
| Sales | Sales | Sales | Sales | |||||
| Total Revenue | $ 14,197.00 | 100.0% | $ 13,198.00 | 100.0% | $ 12,397.00 | 100.0% | $ 12,575.00 | 100.0% |
| Cost of Revenue | $ 8,763.00 | 61.7% | $ 8,046.00 | 61.0% | $ 7,055.00 | 56.9% | $ 7,184.00 | 57.1% |
| Operating Expenses | $ 3,872.00 | 27.3% | $ 3,725.00 | 28.2% | $ 3,305.00 | 26.7% | $ 3,390.00 | 27.0% |
| EBIT | $ 1,562.00 | 11.0% | $ 1,427.00 | 10.8% | $ 2,037.00 | 16.4% | $ 2,001.00 | 15.9% |
| Net Interest Income/Expense | $ 237.00 | 1.7% | $ 245.00 | 1.9% | $ 254.00 | 2.0% | $ 321.00 | 2.6% |
| Income Tax | $ 363.00 | 2.6% | $ 320.00 | 2.4% | $ 510.00 | 4.1% | $ 476.00 | 3.8% |
| Net Income | $ 962.00 | 6.8% | $ 862.00 | 6.5% | $ 1,273.00 | 10.3% | $ 1,204.00 | 9.6% |
| DPS (dividend per share) | 1.74 | 1.67 | 1.56 | 1.43 | ||||
| EPS (earnings per share) | 2.68 | 2.39 | 3.43 | 3.17 | ||||
| Free Cash Flow | $ 1,225.00 | $ 1,001.00 | $ 534.00 | $ 1,266.00 | ||||
| * See the FCF article below: | ||||||||
| http://www.investopedia.com/articles/fundamental-analysis/09/free-cash-flow-yield.asp |
Ratios
| SUMMARY OF FINANCIAL RATIOS | |||||||||
| Kellogg (NYSE) - K | 2012 | 2011 | 2010 | 2009 | |||||
| 12/31/12 | 12/31/11 | 12/31/10 | 12/31/09 | ||||||
| Ratio | Ratio Value | Benchmark | Ratio Value | Benchmark | Ratio Value | Benchmark | Ratio Value | Benchmark | |
| Liquidity | |||||||||
| Current | 0.75 | 1.22 | 0.93 | 0.92 | 1.12 | --> CA / CL | |||
| Quick | 0.45 | 0.59 | 0.57 | 0.58 | 0.72 | ||||
| Asset management | |||||||||
| Inventory Turnover | 6.42 | 6.09 | 6.85 | 6.68 | 7.89 | ||||
| Days sales in inventory | 56.86 | 53.26 | 54.63 | 46.23 | |||||
| Fixed assets turnover | 1.20 | 1.49 | 1.39 | 1.46 | |||||
| Total assets turnover | 0.93 | 0.89 | 1.11 | 1.05 | 1.12 | --> Sales / TA | |||
| Leverage (Debt Management) | |||||||||
| Debt to total assets | 0.84 | 0.85 | 0.82 | 0.80 | --> Tot. Debt / TA | ||||
| Debt to equity | 5.28 | 1.30 | 5.65 | 4.49 | 3.93 | ||||
| Equity multiplier | 6.28 | 3.82 | 6.65 | 5.49 | 4.93 | --> TA / Equity | |||
| Times interest earned | 6.59 | 5.82 | 8.02 | 6.23 | --> EBIT / Interest | ||||
| Profitability | |||||||||
| Net Profit Margin | 6.78% | 8.44% | 6.53% | 10.27% | 9.57% | --> NI / Sales | |||
| ROA | 6.34% | 7.54% | 7.22% | 10.75% | 10.75% | --> NI / TA | |||
| ROE | 39.77% | 28.69% | 48.00% | 58.99% | 52.99% | --> NI / Equity | |||
| Market Value | |||||||||
| Earnings per Share | 2.68 | 2.39 | 3.43 | 3.17 | |||||
| Price/earnings | 20.65 | 21.32 | 21.16 | 14.89 | 17.03 | ||||
| Market/book | 8.26 | 4.29 | 10.06 | 8.65 | 9.06 | ||||
| Dividends | |||||||||
| Dividends per share | 1.74 | 1.67 | 1.56 | 1.43 | |||||
| Dividend payout ratio | 0.39 | 0.41 | 0.31 | 0.31 | |||||
| Retention ratio | 0.61 | 0.59 | 0.69 | 0.69 | |||||
| Growth Rates | |||||||||
| Internal Growth Rate | 0.04 | 0.04 | 0.08 | 0.08 | |||||
| Sustainable Growth Rate | 0.32 | 0.39 | 0.68 | 0.58 | |||||
| DuPont Equation | |||||||||
| * Explains why ROE is high or low. | |||||||||
| In 2012 K's ROE was 39.8% vs. industry average of 28.7%. What explains this difference? | |||||||||
| Kellogg | Industry | ||||||||
| 1. Operational efficiency (ability to control costs) | --> Profit margin | 6.78% | 8.44% | ||||||
| 2. Debt usage (leverage efficinecy) | --> Equity Multiplier | 6.28 | 3.82 | ||||||
| 3. Asset utilization efficiency | --> Total Asset Turnover | 0.93 | 0.89 | ||||||
| ROE = | 39.8% | 28.7% |
Sheet1
| * Assume US Corporation stock trades at $25/share on December, 31 2008 and there are 100,000,000 common stock shares outstanding | |||||||||
| Year 2008 | |||||||||
| Liquidity | 1. Current Ratio | = CA / CL | 1,403 / 389 = | 3.61 | |||||
| Asset Mgmt | 2. TATO | = SALES / TA | 1,509 / 3,112 = | 0.48 | |||||
| Debt Mgmt | 3. Total Debt | = Debt / TA | (389 + 454) / 3,112 = | 27.1% | |||||
| 4. EM | = TA / Equity | 3,112 / 2,269 = | 1.37 | ||||||
| Profitability | 5. NPM | = NI / Sales | 412 / 1,509 = | 27.3% | |||||
| 6. ROE | = NI / Equity | 412 / 2,269 = | 18.2% | ||||||
| 7. ROA | = NI / TA | 412 / 3,112 = | 13.2% | ||||||
| Market | 8. MB | = Price / BVpS | 25 / (3,112 / 1,000) = | 8.03 | |||||
| 9. PE | = Price / Earnings | 25 / (1,509 / 1,000) = | 16.57 | ||||||
| Here are US Corp industry averages for selected ratios | |||||||||
| ROE | 24.5% | 18.2% | |||||||
| NPM | 35% | 27.3% | |||||||
| TATO | 0.5 | 0.48 | |||||||
| EM | 1.4 | 1.37 | |||||||
| practice problems | |||||||||
| Based on #2 from p. 107 | |||||||||
| Total Assets | $ 10,000,000 | ||||||||
| Accounts Payable | $ 2,000,000 | ||||||||
| Notes Payable | $ 1,000,000 | ||||||||
| Bonds | $ 3,000,000 | ||||||||
| Comm. Stock at par | $ 1,000,000 | ||||||||
| Contributed capital | $ 500,000 | ||||||||
| Retained earnings | $ 2,500,000 | ||||||||
| Total Liab. And Equity | $ 10,000,000 | ||||||||
| If the company has sales of $20 mln, how would its ROE change if the profit margin increases from the current 3% level to 7%? | |||||||||
| 15.000% | |||||||||
| 35.000% | |||||||||
| Based on #9 from p. 109 | |||||||||
| Gulf Controls Inc. has a net profit margin of 10% and sales of $6,000,000. It's balance sheet looks like this: | |||||||||
| Current Assets | $ 1,800,000 | Industry averages for selected ratios are below: | |||||||
| Fixed Assets | $ 2,200,000 | ||||||||
| Total Assets | $ 4,000,000 | Net Profit Margin | 6% | 10% | --> this is given | ||||
| Total Asset Turnover | 2.5 | 1.5 | --> 6 mln of sales / 4 mln of TA | ||||||
| Current Liabilities | $ 600,000 | Equity Multiplier | 1.4 | 1.67 | ---> 4000000/(500000+1900000) | ||||
| Long-term debt | $ 1,000,000 | (total assets / (com. Stock + ret. Earnings) | |||||||
| Common Stock | $ 500,000 | Industry ROE | 21.00% | 25.00% | |||||
| Retained Earnings | $ 1,900,000 | ||||||||
| Total Liab. & Equity | $ 4,000,000 | NI = | 600000 | ||||||
| ROE = | 25.00% | ||||||||
| a. find Gulf's ROE | |||||||||
| b. what is the source of the major differences between the Gulf and "average" firm profitability? |
